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Auto Sales Maintain Torrid Pace in November; 2001 Could Be Second-Best Year Ever

November 29, 2001

November demand for new cars and trucks is exceeding industry expectations even after a torrid October and despite a cloudy economic outlook, raising prospects 2001 could turn out to be the second-best year ever for U.S. auto sales, according to a story by Susan Carney in the Detroit News.

According to NADA Chief Economist Paul Taylor, after the all-time record monthly sales in October, selling 22 million vehicles at an annualized rate for the month, sales could eclipse 1999's 16.9 million units.

November sales are relatively robust, but December remains a question mark, according to Taylor. Light-vehicle inventory has been drawn down by the exceptional October sales combined with uncertainty over the extensions of zero percent programs, which subdued new light vehicle orders in October.

"The Big 3 are on track to exceed original build

schedules for November, and, if vehicle supplies are ample and sales remain brisk in December, sales could exceed 17 million units," Taylor said. "If weather and increased output of cars combine with continued strong consumer demand, the second best year in history is a real possibility."

Major automakers plan to release November sales results on Dec. 3 and analysts expect another robust month.

The U.S. market for new cars and trucks is down 2.6 percent overall this year, but some automakers, including Toyota Motor Corp., Honda Motor Co., BMW AG and Hyundai Motor Co., are on pace to eclipse annual sales records.

A record 17.4 million units were sold in 2000, breaking the previous record of 16.96 million vehicles in 1999.

Interest-free and low-rate loans jump-started sluggish sales after the Sept. 11 terrorist attacks, pushing October sales to an annual selling rate of 21.3 million vehicles -- the best single-month performance ever.

For 2001 sales to outpace 1999 levels, analysts estimate that December sales must total an annual selling rate of 13.6 million units. In the current sales environment, spurred by generous rebates, some analysts say that remains a fairly low hurdle -- annualized sales in December 2000 totaled 15.4 million units, the worst monthly showing in a record year.

But with the economy officially in a recession, rising unemployment, slowing income growth and conflicting reports about the health of consumer confidence and spending, some analysts believe sales could stumble next month.

Few analysts would have predicted as strong a finish just a few months ago when there were fears monthly annual sales could fall as low as 15 million units.

General Motors Corp. launched the zero percent interest loans and rivals Ford Motor Co. and DaimlerChrysler AG's Chrysler Group soon followed suit, along with Toyota and others.

U.S. automakers have extended the deals into January, and Toyota joined them Nov. 28 on select cars and trucks.

The incentives have been so popular that some buyers have had a tought time finding the vehicles they want as dealers' new-car inventories become depleted. At the same time, used-car inventories are larger than ever due to the flood of trade-ins.

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