DETROIT – Detroit's Big Three automakers reported a drop Friday in January sales of new cars and light trucks, as a rollback on highly popular zero-percent financing deals hurt their retail business.
General Motors Corp. , Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG all gained market share late last year, as strong consumer spending and interest-free financing on vehicles helped push the recession-hit U.S. economy into an unexpected expansion in the final three months of 2001.
But automakers suspended most of the zero-percent deals in early January, and that was reflected in a 12.7 percent decline in monthly sales at GM, a 12.6 percent drop at Ford and a 9 percent fall at Chrysler.
Those declines -- which do not include U.S. sales of foreign brands owned by Detroit automakers -- came despite a rise in U.S. consumer sentiment for a fourth straight month, to its highest level in a year, in January.
GM said its decline was due almost entirely to a steep drop in sales to rental fleets. Ford also said business fleet sales declines hurt its results.
U.S. light vehicle sales, which account for more than one-fifth of U.S. retail sales, totaled 17.2 million units in 2001. That was the second-highest yearly total in the country's automotive history, despite the recession and economic fallout from the Sept. 11 attacks in New York and Washington.
With most but not all automakers having already reported, January sales on a seasonally adjusted annual basis were seen coming in at a rate of 16 million. That would defy gloomy predictions late last year, when some industry analysts said January sales would slow to a 15 million annual rate.
But U.S. automakers admitted, even without zero-percent financing, that sales were artificially propped by aggressive price cuts that erode their profitability.
"The competitive landscape is no less intense," said chief Ford sales analyst George Pipas. "Pricing is the double-edged sword."
All of Detroit's auto companies have been hurt by the recession, quality problems, overcapacity and tough competition from Asian and European rivals. But Ford, the world's No. 2 automaker, has been hardest hit in the last year. A turnaround plan, which the company unveiled on Jan. 11, will close up to seven North American plants and cut 35,000 jobs worldwide, or about 10 percent of Ford's work force.
There was a bit of good news in Ford's sales results on Friday, which came after a California jury dealt the company a blow by ruling that its popular Explorer sport utility vehicle is defective by design because of its long-alleged propensity to roll over in emergency avoidance maneuvers.
Ford's Jaguar brand said its January U.S. sales rose 87.5 percent while its Land Rover nameplate saw sales jump 133 percent, fueled in part by consumer demand for its all-new Freelander compact sport utility vehicle.
Luxury car maker Mercedes-Benz, a German unit of German-American DaimlerChrysler, also performed strongly, registering a 19 percent gain in January sales.
KOREAN GAINS
Other foreign brands that fared well in January included South Korean powerhouse Hyundai Motor Co. Ltd. , which saw its U.S. sales rise 22 percent, and its Kia Motors Corp. affiliate, which reported a 32 percent increase in sales.
Japan's third-ranked automaker Nissan Motor Co. Ltd. said its sales rose 9.6 percent in January, thanks to its fast-selling new Altima mid-size sedan, while No. 2 Honda Motor Co. Ltd. reported that sales for the month were flat against strong results last year.
Japan's top automaker, Toyota Motor Co. Ltd. , was due to report sales later on Friday.
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