Sales of new vehicles in January
don't look very promising, according to a new survey by the Power Information
Network maintained by J.D. Power & Associates of
In addition, gasoline prices are
beginning to move upwards again, putting new pressure on motorists and
manufacturers who had been counting on relatively stable oil prices to boost
consumer confidence and sales of new vehicles, raising the possibility carmakers
will be unable to avoid heavy-duty incentives as the year progresses.
The report from the Power
Information Network estimated that new-vehicle retail sales were down 11 percent
through the first 15 days of January when compared to the same time period a
GM's retail sales when compared to
early January 2005 dropped 28 percent while Ford Motor Co.'s fell 25 percent in
the first 15 days of January. DaimlerChrysler sales were down 13 percent when
compared to the same period in 2005. Domestic manufacturers generally tend to do
better once the fleet sales numbers are added to the mix.
Trends stay the same
"The trends haven't changed very
much—the domestics continue to slip while the Asians gain ground," said Tom
Libby, senior director of industry analysis at PIN. "To combat this trend, GM,
for one, is counting on its aggressive price reductions, which just went into
effect on the 11th," he said.
Joe Eberhardt, Chrysler Group
executive vice president for sales and marketing for the Chrysler Group,
acknowledged last week that sales were soft this month and said Chrysler has
countered the decline by boosting incentives.
Jim Press, Toyota Motor Sales
president, also conceded last week that
One reason for the overall retail
sales decline in the new-vehicle market is that the manufacturers have reduced
their incentive offerings, the Power report said. Through the first 15 days
of January, the average incentive expenditure per unit was $2,089—down 16
percent versus a year ago.
Incentives were down 20 percent at
General Motors, 12 percent at DaimlerChrysler and 2 percent at Ford Motor
Company, the Power report said. Incentives for sporty, full-size, mid-size and
compact car categories were all down 40 percent or more versus a year ago, while
only SUV incentives were up, the report said.
"While retail sales are off to a
weak start, fleet sales are expected to pick up the pace and keep January's
selling rate for the month roughly in line with last year's 16.3 million unit
pace for combined retail and fleet sales," said Bob Schnorbus, chief economist
of global forecasting at J.D. Power and Associates.
"The slow start to the new year is
consistent with what has been happening in the past few years, and thus should
not be too surprising. However, it will keep the pressure on automakers to
continue returning to aggressive incentive programs in order to pull sales up as
the year progresses," Schnorbus predicted.
DaimlerChrysler also saw a decline
in the first 15 days of January to 12.8 percent, which was down 0.3 points.
However, Honda, Nissan and Hyundai have all increased market share versus a year
ago, with American Honda at 12.3 percent which was up 1.4 points, Nissan at 8.6
percent, which was up 0.7 point and Hyundai at 5.7 percent, which was up 1.4
Meanwhile, gasoline prices have
risen for the third straight week and the price of crude oil jumped again last
week on reports of labor unrest in the Nigerian oil fields and political tension
in the Middle East over
"Motorists might seen prices stabilize over the next week or two, but that could only be a temporary pause," Auto Club spokesperson Carol Thorp said. "Upward pressure on gas prices will increase in February due to reduced production as refineries rush to finish the changeover from producing winter grade to summer grade fuel before the March 1 deadline."