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  1. #1
    BrionnaGa Guest

    Discounts pump up GMs sales, hurt rivals

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    DETROIT (Reuters) - Big consumer incentives deliveredblockbuster results for General Motors Corp. (NYSE:GM - news) in June,with its U.S. sales jumping 41 percent over the same month lastyear, largely at the expense of Detroit-based rivals.Ford Motor Co. (NYSE:F - news) lost the most market share, as itposted its 13th consecutive month of lower U.S. vehicle sales.Like GM, the No. 2 U.S. automaker is struggling to stopbleeding money in its core operations.
    Japan's Toyota Motor Corp. (7203.T) and Nissan Motor Corp.(7201.T) also posted double-digit gains, and Toyota said itsfirst-half sales were the best-ever in 48 years of doingbusiness in the United States.
    The stronger-than-expected increase at GM was driven bysteep discounts that could hurt its bottom line. But it gavetemporary relief to the world's largest automaker, boostingGM's market share and offsetting sales declines thatcontributed to a 1.1 billion first-quarter loss.
    It was the company's strongest sales month since September1986, and GM said it set an all-time industry record for lighttruck sales, which were up 68 percent.
    Shares in GM rose 2 percent, helping to lift blue-chipstocks in the day.
    The company's deals lured customers away from the showroomsof Ford and others, including the Chrysler unit of Germany'sDaimlerChrysler, (NYSECX - news) (DCXGn.DE) analysts said.
    "GM took sales from everybody with this program of theirsbut I think they took most of it from Ford and Chrysler," saidDavid Healy of Burnham Securities.
    "GM stole the month with the program," he added, referringto GM's "Employee Discount for Everyone" incentives strategy.
    The increase in GM's sales of light trucks, a category thatincludes SUVs, pickups and minivans, bucked a worrisome trendfor U.S. automakers, which have recently seen sales of large,fuel-thirsty vehicles slump dramatically in the face of risingU.S. gasoline prices.
    June delivered more sobering results for other automakersas they struggled to compete with GM's incentives.
    Chrysler, which said on Friday that it would launch adiscount program similar to GM's next week, posted a wafer-thin1 percent rise in June sales. And Ford's sales of new cars andtrucks fell 2.5 percent. The result was adjusted for one moreselling day in June this year and excludes Ford's foreignbrands.
    Ford's chief sales analyst George Pipas said the companyhad its best sales results so far this year. But he saideveryone had been hurt by GM's success.
    "We stand in the shadow of GM, okay? But, hey, guess what,so does everybody else," Pipas said.
    Vehicle sales across the industry strengthened 11 percentto a seasonally adjusted annual rate of 17.5 million in June.That was far above the 15.4 million rate in June last year and16.6 million in May.
    GM's marketing strategy, under which it now sells anybody anew car or truck at the same price a GM employee would pay,resonated with consumers because it eliminated the pricenegotiations so many car shoppers dread, analysts said.
    SQUEEZING GM MARGINS
    But in offering all customers the same discount asemployees, GM may also be sacrificing profit by squeezing itsmargins, a concern that has rung alarm bells on Wall Street."We believe this is likely the most expensive marketingprogram ever run by GM," Rod Lache, who tracks the autoindustry for Deutsche Bank, said in a research note.He said the high cost of GM's employee discount representeda 900 escalation in cost per vehicle in incentives over May.Paul Ballew, GM's head of global market and industryanalysis, told reporters and analysts on a conference call thatGM's incentives were flat or up just slightly month-over-month,however.GM's June performance gave it a near 33 percent share ofthe U.S. light vehicle market, an impressive gain from a 25.8percent share in May.But Lache cautioned that deep discounts would also weigh onthe automaker's second-quarter earnings and cash flow.Furthermore, whatever fleeting success GM has with itsfiresale marketing, analysts predict more long-term shareerosion for it and other Detroit automakers. GM and Ford bothface hyper-competition from Asian rivals with new vehicleofferings and attractive models across the entire market.Nissan said its U.S. sales were up 14 percent in June. Theresult was driven by demand for Nissan's Altima mid-size sedanand its new Pathfinder SUV, Jed Connelly, the company's NorthAmerican sales chief, told Reuters.Toyota, meanwhile, said its U.S. sales rose 10 percent overJune 2004 and Honda Motor Co. Ltd. said its sales were up 4.7percent.GM shares closed up 65 cents on the New York Stock Exchangeat 34.65, while Ford closed up 7 cents at 10.31.(With reporting by Poornima Gupta)

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    webmcb is offline Newbie 510 points
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    i think may be someone buy a car from somewhere.
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