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Domestic Auto Sales Stronger Than Expected

December 16, 1987|LESLIE ERINGAARD | Times Staff Writer

DETROIT — New domestic auto sales dipped 1.9% in early December, surprising many auto analysts who had expected weaker sales.

"The auto sales numbers are extremely strong," said Theodore Sullivan, an auto analyst with Wharton Econometrics. He remarked that this was the second consecutive 10-day period that the annual sales rate was significantly higher than the yearlong trend of 7.2 million units.

The annual sales rates for early December and late November registered at a strong 7.7 million units. The annual rate reflects the number of cars that would be sold if the period's sales pace were to continue for a full year.

"I don't expect it to continue. I think there is something screwy going on with the numbers," Sullivan said. "I don't think they'll hold up that high over the next few 10-day periods. . . . Something is going on here that just doesn't jibe with the economy. Maybe economists are just too pessimistic about what the economy holds for 1988, (but) I'm not ready to abandon my forecast."

Sullivan speculated that a glut of recent fleet orders may have temporarily inflated the sales numbers but expressed doubt that this explanation was completely satisfactory. "Seasonal factors get large at this period and blow up the (auto sales) number," he admitted.

December is traditionally a slow month for auto sales.

"(Sales are) pretty good," said Thomas O'Grady, an automotive analyst with Integrated Automotive Resources. "I expected (sales) to be down a little bit more. . . . Maybe these auto companies can loosen their budget and concentrate on . . . planning."

O'Grady speculated that if auto sales remain steady for the next several sales periods, auto makers may need to increase their production schedules slightly.

In an unexpected twist, Ford's sales dropped more significantly than GM's in the period. This is surprising because GM's domestic auto sales have been sluggish all year, while Ford's sales have remained relatively strong.

"GM sweetened its incentives before other people," said O'Grady, explaining why GM sales look healthier than those for Ford and Chrysler. "Of course, everybody else followed."

Sales incentives were reinstated around Thanksgiving.


Dec. 1-10 Dec. 1-10 % 10-Day 1987 1986 change GM 92,036 94,120 -2.2 Ford 56,841 60,158 -5.5 Chrysler 26,814 28,682 -6.5 Honda U.S. 6,997 4,202 +66.5 VW U.S. 873 1,220 -28.4 Nissan U.S. 1,530 2,006 -23.7 Toyota U.S. 1,862 421 +342.3 Mazda U.S. 173 -- -- TOTAL 187,126 190,809 -1.9

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