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Healthy U.S. Car Sales Expected for June

June 26, 2001

Automakers are expected to report healthy U.S. sales for June when they release results next week, boosted by growing cash rebates, cheap loans and other incentives for consumers.

Wall Street analysts see sales for the month running at a seasonally adjusted annual rate of about 16.9 million vehicles, matching last month's performance and only slightly behind the blistering 17.1-million rate of June 2000.

With the economy still uncertain, much of the strength will come from the incentives automakers are offering to lure customers into showrooms, now averaging more than $1,800 per vehicle.

Analysts say much of the month's strength came from a General Motors Corp. program offering some lessees early cancellations of their leases if they take a new GM vehicle instead. About 300,000 GM customers are eligible, and GM says it expects up to 25 percent to take the offer.

GM sees the program as a low-cost way of boosting demand. The lessees who qualify would have turned in their vehicles during the winter months, when the value of the vehicles would have been lower. The lessees would also have had a choice of buying a non-GM vehicle.

According to analysts, the program will probably keep GM's sales even or slightly ahead of results from June of last year. But they also believe the effect of the program, which expires July 15, will be short-term.

As in May, much of GM's gains could come at the expense of Ford Motor Co., which has had to deal with the furor over its decision to recall 13 million Firestone tires. Predictions for Ford's sales drop range from 5 percent to 11 percent.

Ford is experimenting with its own lease-trade program on its Windstar minivan and has added dealer incentives to its F-Series pickups.

Chrysler Group already offered incentives averaging more than $2,400 per vehicle going into June, higher than any other automaker. Its sales are seen as being essentially flat.

Once again, foreign automakers are expected to improve their sales and market share in the United States. In May, GM. Ford and DaimlerChrysler AG held 63 percent of the market, compared with 65.6 percent last year and far below historical levels.

Analysts estimate that Toyota Motor Corp.'s sales will be up around 15 percent, while Honda Motor Co. Ltd.'s sales will be up about 5 percent.

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