U.S. auto sales likely to rise 8 percent or more in September

Article by Christian A., on October 1, 2012

As dealerships have been offering huge cash incentives on pickup trucks, analysts believe that U.S. auto sales would probably increase by 8% or higher in September. In some areas in the U.S., some automakers have been giving up to $10,000 a vehicle in incentives. A Reuters poll revealed that the annualized sales rate would be approximately 14.5 million in September.

This would be the fourth consecutive month that sales would be higher than 14 million. The rise is being attributed to appealing credit terms as well as to the demand that has been building up. Analysts said that General Motors Co. and other automakers are giving cash incentives to aid in selling down excess truck inventory during a time when truck sales usually accelerate.

Kelley Blue Book analyst Alec Gutierrez said that truck demand was a bit lower than usual this year, due partly to high gasoline prices that have remained near $4 a gallon this year. He said that all the automakers likely overproduced because they overestimated the strength of the truck market this year. Analysts said that the incentives weren’t big enough to indicate a return to Detroit's historic pattern of giving steep discounts to meet hefty sales targets.

Auto research firm TrueCar.com said that overall, incentive spending had dropped by 6.7% this month as cars and crossovers have become available at higher prices. But what investors are worried about are high truck inventory levels. GM has 122 days of trucks on lots. But higher than approximately 80 days is considered optimal. Ford Motor Co. has around 77 days, while Chrysler Group LLC has 99 days. To reduce inventory, GM is providing up to $3,500 cash back on its 2012 Chevrolet Silverado. In return, Ford is giving as much as $5,500 back on 2012 F-150, while Chrysler is providing as much as $4,000 in rebates on its Ram 1500, according to KBB, which monitors the prices of vehicles.

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