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Tuesday, 2 October, 2001, 20:51 GMT 21:51 UK
Car makers rattled by US attacks
PT Cruiser
Buoyant sales of the popular PT Cruiser have failed to stem Chrysler's decline
US car giants have reported sharp drops in car sales in the aftermath of the terrorist attacks on 11 September, but closer analysis shows that the slump may have been brief.

Chrysler was worst hit, with sales plummeting 28%, while Ford reported a 10% drop.

The biggest car maker in the United States, General Motors, said its sales fell just 3%, describing it as a much better result than expected.

But all companies have been hit by higher marketing costs, as they try to lure customers into the showrooms by offering interest free credit and hefty discounts.

Chrysler keeps suffering

Among US car makers Chrysler had the worst of it, with sales falling 28% year-on-year. Truck sales were particularly sluggish.

Chrysler offer for 0% interest on new car sales
Interest free credit is hurting the bottom-line of US car makers

However, the figures are slightly distorted by the fact that September 2000 was a record month for Chrysler, so in the current economic climate the only way was down.

Chrysler said it would shut down a Canadian plant in Windsor, Ontario, for three weeks in October, and close four other plants for one week each.

Quick recovery?

Ford saw a 10% drop, but said its sales data were less gloomy when analysed day-by-day.

During the last 10 days of the month car sales had actually been above levels seen a year ago. "By the end of the month, sales were nearly as high as what was expected when the month began", said George Pipas, a sales analyst at Ford.

And significantly, buyers are not opting for cheaper vehicles. Ford's top-of-the-range brands like Jaguar and Volvo actually saw sales figures go up, by 4.6% and 1.3% respectively.

But shifting cars other than the premium brands is proving costly to Ford. Customer incentives have raised marketing costs by 10%, pushing the company into a loss for the whole third quarter of the year - July to September, warned Ford controller Lloyd Hansen.

Upbeat GM

General Motors' performance stands in stark contrast to that of its rivals.

Chevrolet Silverado - a General Motors brand
GM motors has seen light truck sales rise 10%

A drop of a mere 3% sets the company on track for its third-best year in history.

And once again a detailed analysis shows that the slump after 11 September may have been brief.

GM said sales were up 6% in the first 10 days of September versus last year, "then declined significantly following September 11th before increasing 22% in the last week of the month".

But profits are likely to suffer. Like its rivals GM has cut prices to attract customers to its showrooms.

The incentive programme - dubbed "Keep America rolling" - taps into the patriotic mood sweeping the United States since the terrorist attacks.

Bill Lovejoy, in charge of sales in North America, said "consumers, by their actions, have provided a great deal of encouragement for our retail program".

Foreign luxury cars keep selling

BMW, meanwhile, saw its cars racing out of the show room, with sales up 4.4%.

But at the cheaper range of the market, the figures do not look that rosy.

Volkswagen posted a sales drop of nearly 19%, Toyota experienced a 4.2% drop, while Honda saw a 2% decline.

See also:

12 Sep 01 | Business
Car makers hope for Frankfurt boost
11 Sep 01 | Business
Ford goes for growth
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