GM posts monthly sales gain

DETROIT - November 3, 2009

Demand for new cars and crossovers in October fueled better results for General Motors Co. and Detroit rival Ford Motor Co. GM's sales rose 4.7 percent from October 2008, while Ford notched a 3-percent gain. Japanese rival Toyota Motor Corp. said its sales edged up less than a percent. Less rosy news came from Chrysler Group LLC, whose sales fell 30 percent, though they improved from September.

Automakers had said October would be a test of the strength of the auto market after the volatile effects of the government's Cash for Clunkers program. The industry staggered through a tough September, hurt by the collapse of demand following the clunker rebates that fueled a sales surge over the summer.

The mood was in contrast to a year ago, when consumers were frightened away from showrooms by the early effects of the financial meltdown and credit freeze.

Ford's top economist Emily Kolinski Morris said October sales signal a real underlying demand for new vehicles after the distorting effects of the clunkers program. The economy, she said, is "in transition from recession to recovery."

"We expect consumers to remain cautious as the recovery continues," she told analysts and reporters during a conference call.

This October, Ford got a boost from new product launches and gained U.S. market share for the 12th time in 13 months as its critically acclaimed vehicles continue to grab buyers from rivals. Ford has also benefited from consumer goodwill because it didn't take government bailout money or go into bankruptcy, as General Motors Chrysler did.

More than 80 percent of Ford's sales last month came from 2010 models, which also helped the company lower its incentives.

That was in line with the industry, which spent less to give car buyers big rebates. Automakers focused on clearing out old inventory and on selling 2010 models, which are not discounted as heavily.

Fuel-efficient models like the Ford Fusion sedan and Escape small sport utility vehicle sold well, with both notching sales jumps of around 25 percent. Ford's overall car sales rose 11 percent over last October, while crossovers climbed 23 percent.

New 2010 models like the Taurus and Lincoln MKT crossover also flew off dealer lots.

Ford's truck sales, by contrast, fell 10 percent.

Chrysler, the maker of the Chrysler, Dodge, Jeep and Ram truck brands sold 65,803 vehicles last month, up 6 percent from September. That was when its sales slumped because dealerships could offer few popular models. The automaker, which is announcing a new product strategy on Wednesday, is aiming to show steady improvement from month to month.

Looking to boost November sales, Chrysler will offer a slew of new incentive programs this week. The carmaker will offer 0 percent financing for up to 48 months on all its vehicles, and a no-cost maintenance and service program on its Jeep and Chrysler brands. Buyers also can opt for $2,500 off their purchase if they don't take the no-interest financing. The deals begin Wednesday and run until Nov. 30.

Automakers spent less money on consumer incentives over all in October compared with last year and September, according to The auto research Web site said 2010 models, which require fewer discounts than older model-year vehicles, made up a larger portion of vehicles sold in October.

Ford spent the least on incentives among the Detroit Three automakers, according to Edmunds. Ford spent $2,909 per vehicle. That's down one-fourth from October last year and 6 percent from September.

Still, it spent more on incentives than the industry average of $2,468, with Japanese automakers like Honda and Toyota spending significantly less.

Susan Docherty, GM's new sales chief, acknowledged that it led the industry in spending on rebates, low-interest financing and other incentives in October. Edmunds estimates GM spent $4,277 per vehicle sold versus the industry average.

The company spent more as it phases out the Pontiac and Saturn brands, and because it had a high number of 2009 models left in its inventory, Docherty said. GM, she said, plans to reduce incentives as it sells down older models and ships more newly launched vehicles, though she declined to say when.

"It didn't happen overnight and we're not going to fix it overnight," Docherty said.

Hyundai, based in South Korea, said its sales jumped 49 percent to 31,005 vehicles. Japanese automaker Subaru said its October auto sales surged 41 percent, helped by strong sales in its Outback and Forester models.

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