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Consumers Wait for Summer Price War as Car Sales Slump

By Joe Benton
ConsumerAffairs.com

July 21, 2006

• GM Aims High-Mileage Cruze At U.S. Market • GM Offers Employee Prices to Spur Slow Sales • U.S. Consumers Favor Japanese and German Automakers • Automakers Report Huge Drop in Sales • GM Cuts Prices for February • Toyota Sales for 2007 May Surpass GM • New GM Sale May Challenge Bargain Hunters • GM Hangs on as World's No. 1 Automaker • Saturn Outlook Gets High Marks from Consumer Reports • Summer Car Sales Start to Sizzle • Consumer Reports Lists Best New Car Deals • Chrysler Dumps Remaining 2006 Inventory on Used Car Market --- • More about Auto Sales ...

Consumers and automakers and consumers are playing a summertime waiting game as U.S. car sales continue to decline with no dramatic sales promotions on the table.

Consumers are yet to see the deep discounts that dominated U.S. cars sales throughout the summer of 2005 as automakers this year are struggling to find profits wherever they can.

The most recent economic bad news for the auto industry came from Ford Motor Co. Losses at Ford continue to mount as SUVs remained on dealer lots because of higher U.S. gasoline prices. Ford's U.S. vehicle sales fell 7 percent in the second quarter of 2006.

Consumers are moving to less-profitable cars, crossovers and hybrids and away from trucks that provide a big share of profits at Ford. The results are slumping sales of pickups and SUVs. Although sales of smaller vehicles are rising, they're not enough to compensate for the decline in trucks.

Nevertheless, Ford has shied away the sort of rock-bottom discounts the company used last year to increase sales. The current Ford incentive program is "Drive on Us" which offers customers zero-percent financing and a prepaid debit card good for as much as $1,100 worth of gasoline.

Sales of domestic automobiles were off sharply across the board in the U.S. last month. The June decline was also attributed to high gasoline prices. Average car sales in the country dropped 10.5 percent in June with U.S. carmakers posting an 18.7 percent drop.

So where are the big new car sales promotions?

General Motors Corp., the world’s number one automaker fired the first shot of the 2005 summertime price war with “Employee Pricing" discounts. The year the top sale guns at General Motors are quiet as the company is standing by its pledge to stay away from eye poping incentive programs.

GM has some zero-percent financing and cash-rebate incentives but nothing like last year's across-the-board and most of the automaker’s incentives are targeted at specific models.

The deepest discounts are at DaimlerChrysler. Chrysler fired the first heavy salvo of the summer with “Employee Pricing Plus” on its line of Chrysler, Dodge and Jeep vehicles. The sales promotion is scheduled to run through July.

Chrysler is also offering a 30-day "money back" satisfaction guarantee. There's no up-front financial benefit to that and could cost as much as $5,000 if you decide to take Chrysler up on the return policy.

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