Car sales slow for first time in two years

June 12, 2000
Web posted at: 10:36 p.m. EDT (0236 GMT)

From correspondent Ed Garsten

LAKE ORION, Michigan (CNN) -- The latest automobile sales figures show that many customers have chosen to either postpone or cancel plans to purchase a vehicle -- the first overall slowdown auto makers have reported in two years.

In May, while sales increased at Ford, Honda and Toyota, both DaimlerChrysler and General Motors reported decreases, according to Automotive News, the industry trade publication.

	VIDEO
Detroit Bureau Chief Ed Garsten reports on how car manufacturers are trying to boost sluggish sales Real 28K 80K Windows Media 28K 80K

"Fundamentally, you're looking at an economy that's begun to decelerate and that's being aggravated now, in particular, by the soaring gas prices," said Comerica Bank Chief Economist David Littman.

DaimlerChrysler's top economist, Van Bussmann, believes creeping interest rates outweigh the impact of higher gas prices, which he said is only temporary.

"The interest rates have a far greater impact because that means what you pay each month for your contract, and consumers look at that a lot more than gas prices," said Van Bussmann.

The sales slowdown has caused some automakers to offer customers a new series of cut-rate financing and cash incentives.

The big three automakers are offering low interest rates and instant cash rebates, and GM is even offering a cash rebate over a special web site it has established.

Peter Barbaro, sales manager at Milosch Dodge, said that with pickup trucks and minivans sitting bumper to bumper on his lot -- twice the normal supply -- the incentives are "a big help, a big relief."

Industry economists say that while the economy may be slowing, it's still in great shape, meaning that auto sales will bounce back by the end of summer.

And that bounce would mean the end of incentives and price breaks -- just in time for the arrival of the 2001 models.

Automakers drive to strong May sales but see bump in road ahead
June 1, 2000
TIME.com: Markets still waiting for a reason to believe
June 9, 2000
Who's raising our rates?
May 22, 2000
Interest rate hike won't have sudden impact on car prices
May 17, 2000
U.S. retail sales slip in April
May 11, 2000
Ford tops 1Q forecasts
April 17, 2000
GM drives past 1Q forecasts
April 13, 2000

Automotive News
Comerica Bank
DaimlerChrysler

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.