GM sales jump 49 percent, aided by sweeter deals
Posted: 12:01 pm Tue, March 1, 2011
DETROIT — General Motors on Tuesday reported that U.S. sales jumped 49 percent last month, aided by sweeter financing and lease deals that drew a response from other major automakers.
The biggest U.S. automaker said its dealers sold just over 207,000 cars and trucks in February, a huge increase driven by sales of newer models from small cars to heavy-duty pickup trucks.
GM boosted incentives such as low-interest financing and lease deals by $400 per vehicle from December to January and continued the deals into February.
With other automakers yet to report sales, it was unclear yet whether a price war had broken out. But the auto industry website TrueCar.com estimated that automakers raised incentives 5 percent from January to February to an average of $2,708 per vehicle. Chrysler, Ford, Hyundai/Kia, Nissan and Toyota all sweetened deals by more than 6 percent for the month, the site said.
Industry analysts expect overall U.S. sales to rise about 20 percent from February of last year. GM is the first major car company to report U.S. sales.
Don Johnson, GM’s vice president of U.S. sales, said the company wanted to get off to a fast start and catch competitors off guard by boosting deals early in the year. But he predicted GM would back off on incentives later in the year.
Automakers have tried for the past year to wean themselves off incentives, trying to sell cars and trucks based on how much they improved quality, not how much they shaved off the sticker price. Incentives on average had been falling since the industry ran into financial trouble in 2009.
Johnson said GM did targeted incentives, mainly in the Northeast, during January and February. It offered to buy drivers out of leases and to give cash to loyal GM customers for trade-ins. Lease deals from the company’s newly acquired GM Financial unit started in Ohio in December and spread to 15 other states.
Yet Johnson vowed that GM would not return to its old ways of offering huge incentives just to move cars and trucks to keep factories running. As recently as March of 2009, GM’s average incentive spending was $4,750 per vehicle, the highest level in a decade, the website Edmunds.com said.
The company, Johnson said, would meet competitors but would not “run out and lead the market’ in incentives.
Johnson said GM has noticed customers looking at small cars more often since gas prices have gone up, but he said consumers have not yet changed their buying habits.
GM said sales of its full-size pickup trucks, the Chevrolet Silverado and Avalanche and the GMC Sierra, rose 65 percent compared with February of last year, another sign that businesses are starting to make purchases again.
Crossover vehicles, which are like sport utilities but more efficient because they’re based on car frames, also saw big increases, led by the five-passenger Chevrolet Equinox, which was up 98 percent.
GM also said its passenger car sales rose 40 percent in February, led by the new Chevrolet Cruze small car that was introduced late last year.
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