Incentives, Selling Battle Result in 3% Gain for December Auto Sales

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DETROIT (Bloomberg) -- Auto-makers will report an estimated 3 percent gain in U.S. sales for December, as incentives and a best- selling-vehicle battle give a strong finish to a lackluster year in which sales failed to grow even as the economy thrived.

The increase over last December, as projected by analysts, would lift U.S. sales to 15.1 million vehicles in 1997, the same as last year, and give the industry its third straight year of 15 million in unit sales. Sales had fallen 0.1 percent through November.

Automakers say they can live with the steady if unspectacular sales, because they're enough to boost industry profits, thanks to cost cuts and increased sales of more-profitable big pickups and sport utility vehicles. Still, the industry's inability to ride a strong economy to higher sales, despite stepped-up rebates, means automakers will be hard-pressed to keep sales from slipping in 1998, analysts said. "It's getting harder and harder to keep up that 15-million pace, and there's less pent-up demand," said Robert Shaw, an industry consultant with the WEFA Group in New York. He sees 1998 sales of 14.7 million vehicles. Toyota and Honda have given December sales a kick by vying to be the company with the country's best-selling car. Toyota's Camry, with sales of 352,902, was 6,000 ahead of Honda's Accord as the month began. Both companies should post sales gains of more than 10 percent this month, analysts said. "We're basically selling everything we've got, and I think Toyota is doing the same," said Art Garner, a Honda spokesman. The race has proved a boon to consumers. Accords can be leased for as little as $239 a month, while Camry is offering buyers 3.9 percent loan rates and equally attractive lease rates. The promotional cache the best-seller crown brings may be worth the effort, analysts said. "It's a good marketing title to have," said Nick Colas, an analyst with Credit Suisse First Boston. He says Honda may be the victor because it has more capacity than Toyota. Ford's Taurus was the best seller last year but Ford has backed away from the less-profitable sales to car rental agencies that propped up volume. Ford's F-Series pickup truck will remain the most popular vehicle in the United States, however. Though down 4.5 percent through November from the year-ago period, Ford's F-series sales for the 11 months of 686,445 almost equaled Camry and Accord sales combined. Industrywide, U.S. car and truck sales in December should hit a seasonally adjusted selling rate of 15.4 million, compared with 14.9 million in the year-earlier month and 15. …

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