General Motors top in-house market researcher has forecast a 3% fall in US vehicle industry sales, largely because no-interest loans coaxed many consumers into buying cars and truckers earlier than they intended, Reuters reported.
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Reuters quoted GM head of market analysis Paul Ballew as saying that the incentives, introduced by car makers to spur sales after the September 11, 2001 terrorist attacks, “will end up costing (the industry) 300,000 to 400,000 units” in 2003.
According to Reuters, Ballew was one of the first industry executives to quantify the effect of low-cost loans on next year’s sales.
The popularity of the incentives will help cut industry sales to 16.5 million vehicles in 2003, including heavy trucks, from 17 million this year, Reuters cited Ballew telling reporters.
“Some of the more bearish calls are that you’re pulling sales from three to four years out,” Scott Hill, a Sanford C. Bernstein analyst who rates General Motors an “outperform” and doesn’t own its shares, told Reuters. He also said that he thinks the impact will be “shorter term”, Reuters added.
Citing figures from researcher Autodata Corporation, Reuters said US vehicle sales in November fell 13% to 1.2 million cars and light trucks as consumers shunned the no-interest loans and cash discounts that helped 2002 sales almost keep pace with records in 2000 and 2001. Industrywide sales have fallen 3.3% so far this year, Reuters noted.
According to Reuters, GM’s Ballew estimated that no-interest loans in 2001 and 2002 prompted about a million consumers to buy before they would have or make purchases that they otherwise wouldn’t have made.
General Motors, whose November US sales fell 18%, will rely on other, unspecified moves to make up for incentives, Ballew told Reuters.
“It’s clear to all of us in the industry we’re moving on to the next phase,” Ballew added, according to the Reuters report.
But, Reuters noted, many analysts expect GM’s sales to be boosted by new and redesigned models planned for coming years.
