General Motors: Overall U.S. Auto Sales Likely to Be Lower Than 2005

General Motors Corp. (GM) on Tuesday said that overall 2006 U.S. auto sales were likely to come in below the 2005 total because of higher interest rates and gasoline prices.

"It's fair to say that the industry is tracking a bit below expectations," said Paul Ballew, GM's chief market analyst.

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In presentation materials prepared for a conference call, GM said it would launch a limited-time zero-percent financing offer on many of its 2006 models. GM said that sale would run over the upcoming U.S. holiday weekend, between June 29 and July 5.

The GM promotion is more limited than the employee-pricing discount offered by the world's largest automaker last year. That promotion, matched by both Ford Motor Co.(F) and DaimlerChrysler AG's (DCX) Chrysler Group, boosted sales to record levels but eroded profitability.

GM Vice President Mark LaNeve said last summer's sweeping discounts would mean that this year's sales totals would fall far short. "Our year-on-year comps are going to be especially brutal," he said.

GM, which has seen its U.S. auto sales slip 8 percent in the first five months of the year, must now protect its market share of just above 23 percent in order to avoid further wrenching cost cuts, analysts have said.

But LaNeve said GM would avoid fire-sale promotional tactics to boost sales and shore up market share.

"Do I want (market share) to be higher? Absolutely. But we've got to do it in the right way," he told reporters and analysts on a conference call. "We have to do it on product strength and pricing in the market that's not dependent on incentives."

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