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GM Researcher Sees 3% Sales Drop in 2003

December 17, 2002

Reuters reported that General Motors top in-house market researcher has forecast a 3 percent fall in US vehicle industry sales, largely because no-interest loans convinced many consumers buy cars and trucks earlier than they intended.

Reuters quoted GM head of market analysis Paul Ballew as saying that the incentives, introduced by car makers to spur sales after the September 11, 2001 terrorist attacks, "will end up costing (the industry) 300,000 to 400,000 units" in 2003.

According to Reuters, Ballew was one of the first industry executives to quantify the effect of low-cost loans on next year's sales.

The popularity of the incentives will help cut industry sales to 16.5 million vehicles in 2003, including heavy trucks, from 17 million this year, Reuters cited Ballew telling reporters.

Citing figures from researcher Autodata Corporation, Reuters said US vehicle sales in November fell 13 percent to 1.2 million cars and light trucks as consumers shunned the no-interest loans and cash discounts that helped 2002 sales almost keep pace with records in 2000 and 2001. Industrywide sales have fallen 3.3 percent so far this year, Reuters noted.

According to Reuters, GM’s Ballew estimated that no-interest loans in 2001 and 2002 prompted about a million consumers to buy before they would have or make purchases that they otherwise wouldn't have made.

General Motors, whose November US sales fell 18 percent, will rely on other, unspecified moves to make up for incentives, Ballew told Reuters.

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