Passenger car sales in the USA reached
their highest September level for five years when they rose by 4.5% against last year at
719,799 from 688,624. That eased the year to date gain to 8.3% at 6,728,986 from
6,212,809. The cumulative rate of growth for the nine months period is a little ahead of
our expectations. We expect a full year total of 8.6 million units, but for that to happen
there will have to be a considerable slow down over the closing months of the year because
the annualised selling rate currently stands at 8.7 million.

It is difficult to justify what is
happening in the US market in 1999, but that same statement applies to other markets in
other areas of the world, particularly in Europe right now. There seems to be a number of
factors at play. On the one hand there is the grim determination of some manufacturers to
hang on to market share regardless of the cost. Thus in what appears to be a bull market
we see some very juicy incentive packages, which will undoubtedly serve to bring some
sales forward. There is also the ongoing search to find a different way to make a personal
statement, and so some of the more exclusive brands and models are enjoying above average
gains. But there is also growing evidence to suggest that the younger players in the
market have developed an excessive feel good factor. With unemployment at its lowest level
for some considerable time, there seems to be a lack of fear concerning job stability. It
would seem that the younger element are not necessarily being reckless, but are certainly
not exercising caution when it comes to major purchases.

We saw a similar situation develop in
Europe about a decade ago. The Yuppie era came in with a vengeance and the car market was
one of the main beneficiaries. But every bubble that grows too fast will surely burst, and
that will surely happen here, although it could well be later rather than sooner, which
means that when the market does start to dip, it could be down a long, steep slope.


General Motors has recorded a 10.2%
increase in sales YTD at 1,999,089 from 1,814,825, but somehow they are not convincing.
Sales in September itself were 7.4% down on September 1998 at 209,820 from 226,472, and
that makes it three Septembers running that GM has sold less than in the year before, even
though GM suffered sales disruptions due to industrial action a year or so ago.

Massive gains have been racked up by the VW
Group and Hyundai Group. Volkswagen is revisiting its past in that sales have suddenly
zoomed to the kind of level that they last enjoyed a quarter of a century ago. The big
difference now is that 25 years ago people bought a VW Beetle because it was cheap and
affordable in running terms. Today the VW product is much more refined and the company is
beginning to become the standard setter for all sectors in which it operates. As the group
have gained 40.8% at 284,144 from 201,847, that has involved Volkswagen, Audi and Rolls
Royce all excelling year to date. Hyundai had to grasp the nettle a year ago, and they
have done so with a fist of steel, and they have been rewarded with a 68.4% boost to
121,962 from 72,420, whilst KIA has chipped in with a 38.9% gain to 62,789 from 45,207.
Daewoo continues to make inroads, but it must be galling for them to see Kia outstrip them
with margin to spare.

The big loser in the market to date has
been Nissan with sales down 5.7% at 274,667 from 291,327, but although Nissan itself will
probably finish the year still in arrears, Infiniti is picking up a fine head of steam and
might just swing the group back into the black by year end.