Updated: May 3, 2010 5:13 PM | By Dee-Ann Durbin,Tom Krisher, THE ASSOCIATED PRESS, cp.org

Car sales slow as shoppers take wait-and-see approach, hoping for summer deals



DETROIT - U.S. car buyers took a wait-and-see approach in April, easing up on purchases as the lure of big incentives faded and amid hopes that summer will bring a new flurry of deals.

Automakers will have to match incentives from Toyota Motor Corp. at least through the U.S. Memorial Day holiday, which falls on May 31 this year.

Toyota said Monday it will continue to offer zero per cent financing and two years of free maintenance on certain vehicles through June 1. It is also offering unprecedented deals on its Lexus luxury brand.

The industry stayed on the road to recovery in April after last year's dismal numbers, with most major automakers seeing double-digit sales gains. But sales were down from March, when Toyota launched record-high incentives to lure buyers after a series of safety recalls.

Incentives continued in April but were five per cent lower as automakers tried to pull back on spending. Jessica Caldwell, an industry analyst with auto information website Edmunds.com, said incentives generally lose their lustre after a few weeks.

"April gave us a sense of what true demand is out there," said Jessica Caldwell, an industry analyst with Edmunds.com. "There was no holiday weekend, and it was tax time. The sales we got in March were not really sustainable."

James Bell, an analyst with auto pricing company Kelley Blue Book, said the March incentives conditioned buyers to look for bargains. As a result, he thinks automakers will have to offer deals well into the summer.

"I think everyone's in check right now. There's an uneasiness that they'll launch something in the summer," he said.

Ford Motor Co. saw last month's sales rise 25 per cent from a year earlier, while General Motors Co. climbed 6.4 per cent. Sales for Toyota Motor Corp. rose 24 per cent, but that was far slower than the year-over-year jump of 41-per cent in March.

Even Chrysler, which has struggled much of the year, reported a 25 per cent sales increase, while Honda, Hyundai, Subaru and others also continued to see gains.

Even though incentives fell, there were still were good bargains in April. Honda Motor Co. spent a record US$1,787 per vehicle, while Toyota spent $2,498, down $245 from record-high levels in March. GM spent $3,273 per vehicle, although that was skewed by high incentives on the brands it is discontinuing.

GM said it spent $100 less per vehicle in April than in March.

"We'll be judicious with our incentives," said Steve Carlisle, GM's new vice-president of sales. "We'll be competitive but not foolish."

Toyota used incentives to continue to spur demand as it distanced itself from safety recalls involving unintended acceleration. But sales slowed 16 per cent compared with a strong March.

The Japanese automaker said its April sales were propelled by some of the vehicles involved in previous recalls like the Corolla compact, Prius hybrid and RAV4 small crossover vehicle.

Honda's sales, including the Honda and Acura brands, rose 12.5 per cent over April of last year.

Chrysler reported its first double-digit sales gain in nearly five years, led by a minivan promotion that drove sales up 68 per cent. It saw sales surge for its Chrysler Sebring and Dodge Avenger midsize sedans.

But its Ram pickup truck sales dropped a troubling 20 per cent, even as main competitors GM and Ford reported rising pickup sales.

Chrysler's sales bucked industry trends and rose three per cent over a March.

After taking out brands that GM is phasing out or selling, GM sales rose 20 per cent from April of last year. GM's four remaining brands are Chevrolet, Buick, GMC and Cadillac.

The Detroit-based automaker saw strong sales of several new products, including the Chevrolet Camaro, Chevrolet Equinox, Buick LaCrosse and GMC Terrain. Full-size pickup truck sales rose 8.4 per cent, an indicator that the construction business is in recovery.

April was the fifth month in a row that Ford posted an increase of 20 per cent or more compared with the same month in the prior year.

The Dearborn, Mich.,-based automaker's pickup sales were particularly strong. Ford said F-Series sales jumped 42 per cent thanks to the new Super Duty truck. SUV sales rose 33 per cent, led by the Escape and Explorer. Car sales rose 10 per cent.

Korean automaker Kia Motors Corp.'s April U.S. sales rose 17 per cent on strong demand for its newly released Sorento crossover and Forte sedan. Hyundai's sales increased 30 per cent on rising demand for the new Sonata midsize sedan.

Subaru's U.S. sales soared 48 per cent the back of its Outback small wagon, which doubled its sales from April of last year.

GM's Carlisle said his company's performance is consistent with a slow and steady economic recovery. The automaker stuck with its forecast of total U.S. light-vehicle sales of 11.2 million to 11.7 million for the year.

That's better than last year's 10.4 million, but far below the peak of more than 17 million in 2000.

Consumer spending rose 0.6 per cent in March, the largest amount in five months. Yet the increase was financed out of savings. Incomes rose only slightly. Factory activity in April grew at the fastest pace in nearly six years.

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AP Auto Writer Dan Strumpf in New York contributed to this report.

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