Discounts, Rebates Fuel Auto Sales

Bargain hunters drove up U.S. vehicle sales 6 percent last month, bringing the Big Three their biggest increase in more than a year.

Buyers used discounts, including so-called "owner loyalty" coupons announced last month, to increase General Motors Corp. sales 8 percent in April compared to the same month last year.

Ford Motor Co., with slower sales of minivans and a dropoff from discontinued models, saw sales rise by just 1 percent. But Chrysler Corp. said Friday that its sales grew 8 percent.

"Floor traffic soared," said Art Spinella, an analyst with CNW Marketing Research Inc. "People have waited for incentives to come to the point where they felt comfortable to buy a car."

Buyers are moving up new vehicle purchases by several months and using the rebates to purchase more expensive vehicles, Spinella said Tuesday. But he said automakers may exhaust demand by this fall.

The Big Three's sales gain of nearly 6 percent exceeded analyst expectations, though automakers were helped with a comparison to a weak April 1997. Automakers are slightly behind pace to match the healthy sales of more than 15.1 million last year.

GM's flat car sales were more than offset by a hefty 18 percent gain in sales of pickups, vans and sport utility vehicles.

The automaker said it boosted sales by finally offering an ample supply of light trucks such as the Chevy Tahoe, which had its best sales month ever. GM also credited a strong economy for the sales increase.

"What I see is strong consumer confidence," said John Middlebrook, Chevrolet's general manager.

The No. 1 automaker acknowledged that discounts helped, especially with sales of small cars, small pickups and small sport utilities.

GM announced April 10 that millions of vehicle owners could save up to $1,000 on a new GM vehicle before June 30. GM, however, said "owner loyalty" coupons were used in only 2.5 percent of retail sales and will capture only 3.5 percent of sales when they likely peak next month.

Automakers must continue the discounts because pent-up demand is exhausted and vehicles are lasting longer.

"The automakers are in a box and the consumers are in the catbird seat," said David Littmann, vice president and senior economist with Comerica Bank.

Ford said car sales were up about 2 percent, while light truck sales were flat. The trendy Expedition SUV posted its second straight double-digit monthly sales decline. The No. 2 automaker said pent-up demand in March and April of 1997 inflated sales in those months.

Ford minivan sales also stalled. But F-Series pickup sales posted a 10 percent increase.

European automakers, with hot-selling models such as the Volkswagen New Beetle and Mercedes M-Class, posted a 39 percent sales gain in April. U.S. sales of Asian automakers grew by just 2 percent.

By John Hughes