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Automakers Jan sales up

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DETROIT (Reuters) - Detroit's traditional Big Three automakers on Wednesday reported surprising increases in January U.S. vehicle sales, breaking losing streaks that began in the fall of last year as their aggressive discounting lost steam.

Both General Motors Corp. and Ford Motor Co. cautioned that their outsized monthly gains came from a one-off surge in fleet sales, while their retail sales declined in the traditionally slow month.

Sales to rental-car companies and other large-scale purchasers such as government agencies are generally less profitable than sales to individual buyers.

Even so, the stronger sales tallies were welcome relief for both GM and Ford, which are struggling to turn around their unprofitable North American vehicle operations.

The two largest U.S. automakers, hit by issues ranging from changing consumer tastes to rising costs for raw materials, have announced plant closings and layoffs.

GM, which last week reported a quarterly loss of $4.8 billion, said U.S. sales rose 6 percent in January, powered by a 30 percent jump in fleet sales.

"I would describe the month as pretty good, solid ... and where we expected it to be," said Paul Ballew, GM's executive director of market and industry analysis.

Ford's sales rose 2.7 percent, while sales for the Chrysler side of DaimlerChrysler AG were up 5 percent in January.

Japanese rivals Toyota Motor Corp. and Honda Motor Co. Ltd. , meanwhile, posted double-digit sales gains, and both said their January sales were best-ever for the month.

Nissan Motor Co. Ltd. , however, saw U.S. sales dip 1 percent, its fourth straight month of decline.


GM said its retail sales were down 7 percent. Ballew said GM was targeting a 10-percent decline in sales to rental companies over the course of 2006, calling the January tally of 85,000 rental sales "a one-month aberration."

One important pocket of strength for GM in January was its new Tahoe SUV, which saw a 53-percent sales increase. GM is banking on a series of redesigned SUVs and pickup trucks, many of which have yet to be launched, to stem its sales slide.

Crosstown rival Ford said fleet sales rose 21 percent.

But Ford's new mid-size sedans -- the Ford Fusion, Mercury Milan, and Lincoln Zephyr -- continued to gain momentum, the company said.

The sales results for the new mid-size sedans translated to an annual sales rate of 220,000 units, well above Ford's original estimate of 190,000, the company's chief sales analyst George Pipas said.

"I think these cars have yet to reach their full potential even at (that) level," Pipas said.

Overall, Ford's car sales increased 18 percent.

In keeping with a continuing trend, sales of Ford's large Expedition SUV declined 30 percent, while its mid-size Explorer was down nearly 23 percent.

Both GM and Ford have relied on mid- and full-sized SUVs as profit engines since the late 1990s. But those vehicles, especially from the aging lineups offered by GM and Ford, have become less attractive as gas prices hover near record highs.

U.S. automakers track economic indicators, including job creation and income growth closely in forecasting sales and production. Their results are watched in turn as an indicator of current economic performance.

The sales declines for the traditional Big Three corresponded roughly to the slower growth in the fourth-quarter posted by the U.S. economy. Gross domestic product slowed to just 1.1 percent annual growth in the fourth quarter, little more than a third of the third quarters 4.1 percent growth.

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well, nice way to down on the positive monthly results.

not really... fleet has been down all along the GMS and Red Tag... so its nice to have it back...

also GM sometimes makes more on Fleet because Fleet doesnt get the huge incentives... Retail is cheaper often times for the customer.

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