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Thursday, 1 November, 2001, 21:10 GMT
US car sales booming
GM's Buick web site
GM's Buick range is among those offering deals
US car sales are booming as buyers rush to grab zero interest finance deals introduced after 11 September.

US car sales
Ford - up 36%
GM - up 31%
Toyota (expected) - up 27.5%
DaimlerChrysler - up 5%
Ford has reported a massive 36% increase in US sales in October, with its F-Series pickup truck setting an all-time record at 102,424 sold.

While General Motors, which was the first to introduce such deals with its 'Keep America Rolling' campaign, is not far behind with a 31% increase.

A smaller increase was reported by the Chrysler side of DaimlerChrysler, which said its US vehicle sales rose 5%.

Hurting profits

The boom in car sales, which account for about 22% of all U.S. retail sales, flies in the face of recent reports of big falls in consumer spending as a recession is all but officially declared.

However, the zero rate deals are hitting the car makers' profits, with Ford and General Motors already reporting huge losses.

Some analysts estimate interest-free deals cost the auto companies an average of $2,500 per vehicle, out of a potential profit margin of about $8,000.

Ford has admitted it lost an average of just over $1,000 on every vehicle it sold in the US in the third quarter.

Ford's newly-promoted chief operating officer, Nick Scheele, said: "It's a very costly way of selling vehicles."

There is also concern that people who might have been planning to buy a car in the New Year are simply bringing forward their purchase to take advantage of the deals, leading a potential slump in sales in the fourth quarter.

GM, Ford and Chrysler have all said their loan offers will end in the middle of November.

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 ON THIS STORY
The BBC's Louise Greenwood
"So why are Americans rushing to buy cars while holding back on buying anything else?"
See also:

18 Oct 01 | Business
GM warns of tough times ahead
30 Oct 01 | Business
Ford chief Jacques Nasser ousted
23 Oct 01 | Business
DaimlerChrysler cheers markets
04 Oct 01 | Business
Car sales defy doomsters
17 Oct 01 | Business
Ford reports huge loss
24 Oct 01 | Business
Picture gallery: Tokyo Motor Show
02 Oct 01 | Business
Car makers rattled by US attacks
26 Sep 01 | Business
Firms rethink ad campaigns
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