Originally created 08/02/97

GM posts biggest sales gain of year



DETROIT (AP) - General Motors Corp. said expanded rebates and other incentives helped boost its U.S. sales of cars and light trucks 6 percent in July over year-ago levels, its biggest sales gain this year.

Cross-town rival Chrysler Corp., meanwhile, on Friday reported a 9 percent sales decline for the same month - its sixth straight month of slower sales.

Among foreign automakers reporting Friday, Honda Motor Co. said its sales increased an impressive 32 percent on strong demand for its Accord and Civic cars. Toyota Motor Corp.'s U.S. sales grew 15 percent.

But it was GM's strong showing that caught Wall Street analysts off guard, coming as it did after a dismal June performance that saw the automaker's market share for that month fall to 28.4 percent.

"These are surprising numbers," said analyst David Healy of Burnham Securities inc. "It makes last month look more like a fluke."

Mike DiGiovanni, GM's market research chief, said the company was surprised in June by how aggressively its domestic competitors had played the rebate game. GM's sales momentum also was hurt that month by major assembly plant strikes in Oklahoma City and Pontiac, Mich.

"June was a horrible month for us," he said. "July reflects us getting back more on track. As we build our new products in the second half and have greater availability, we're hoping we get more momentum."

GM officials said a change in incentive strategy also was paying dividends. In the past, the company offered dealers a "carryover allowance," a 5 percent discount on the previous year's models left on lots after the new model year began Oct. 1.

That gave dealers an incentive to hold onto their inventory until October, while some customers waited until the fall to buy, knowing they could get a better price.

"It didn't really make a lot of sense," GM finance manager Joe McCusker said.

This year, the automaker is instead targeting that money on rebates and other incentives on older, slower selling models during the summer.

"That may have had a lot to do with these good July numbers," Healy said.

GM increased its rebates on several models in mid-July, and sales in the second half of the month were much stronger than the first. Even showroom dogs like the Chevrolet Camaro and Pontiac Firebird sport coupes showed modest sales gains last month, thanks to $1,250 rebates.

Each of GM's seven domestic divisions, except Oldsmobile, reported a sales increase last month. Olds is in the process of ramping up production of two new sedans - the '98 Cutlass compact and Intrigue midsize - that it hopes will reverse a long-term sales slide.

Demand for GM and Chrysler minivans continued to improve in July, with Chrysler posting a July record at 50,547 units. GM said sales of its three minivan models, redesigned for '97, were up 80 percent for the first seven months of the year compared with the same period of 1996.

Spokesman Andy Boyd of American Honda Motor Co. credited the Japanese automaker's big gain on improved inventories of the hot-selling Accord, Civic and CR-V, Honda's new, car-based sport utility vehicle. The subcompact Civic, with sales up 51 percent, posted its best July ever.

Toyota's sales were led by record July demand for the Camry sedan, so far the year's best-selling car in the United States. Toyota's 4Runner and RAV4 sport utilities also set July sales records.