Vehicle sales fell by a fraction last month despite heavy incentive spending by auto makers, and the eighth successive monthly decline prompted some companies to kick up the competition another notch yesterday by introducing better warranties and new giveaways.
"They poured money into the marketplace in the last couple of weeks to rescue March," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.
Despite the offers of interest-free loans and cash rebates, sales fell 0.2 per cent to 146,144 in the first month of the key spring selling season, down from 146,431 in March, 2003.
The numbers caused Mr. DesRosiers to downgrade his forecast for full-year sales to the 1.555 million range from an earlier forecast of 1.565 million and last year's total of 1.593 million.
"This is not showing very much promise," he said.
In the United States, auto makers raised incentive levels yesterday even though vehicle sales rose 4 per cent in March from year-earlier levels, while in Canada, companies will try some new methods to get buyers into the showrooms.
Hyundai Auto Canada extended the warranties on its cars and sport utility vehicles yesterday to what it says is the best in the business, with bumper-to-bumper coverage for five years or 100,000 kilometres, engine and transmission coverage to seven years or 120,000 km and an improved roadside assistance program.
Ford Motor Co. of Canada Ltd. is giving buyers of 2004 pickup trucks $1,000 toward the purchase of such accessories as moulded splash guards, wraparound bug shields and side window deflectors.
Ford and Hyundai were among the companies posting double-digit losses last month, with Ford's sales down 12 per cent and Hyundai's off 11 per cent.
"Our cars are not doing the job in the marketplace," said one Alberta Ford dealer. "The [F-150] truck is doing well."
Among the big auto makers, Mazda Canada Inc. and Nissan Canada Inc. fared best with gains of 24 per cent and 16 per cent respectively.
That increase produced record March sales for Nissan. Others that posted record months included Subaru Canada Inc., Toyota Canada Inc. and Volvo Canada Inc.
DaimlerChrysler Canada Inc. rode new minivans and Dodge Ram pickups to its best sales of the year with a 9-per-cent jump. General Motors of Canada Ltd. also gained market share with a 3-per-cent sales increase.
New vehicle sales in Canada have slumped in part because of a collapse in prices for used cars, Mr. DesRosiers said. The average four-year-old vehicle has lost $1,500 in value in the past six months, he said.
Adesa Canada, which owns used-car auctions across the country, said in its first used vehicle price index released earlier this week that prices fell dramatically from July, 2002, to a trough last September, but appear to have been rising since then.
The trigger for the collapse was the rise in value of the Canadian dollar against the U.S. currency, which made Canadian vehicles much less attractive to U.S. buyers.
In the U.S. market, auto makers are also ratcheting up incentives, with the Chrysler group slapping $1,000 (U.S.) cash on its redesigned minivans -- just weeks after reaching full production on the new models -- and General Motors Corp. offering $1,000 cash and interest-free loans for five years on full-sized pickups and sport utility vehicles.
"This aggressive action by GM, which will no doubt elicit a response from its major competitors, sends the message clearly that the auto industry intends to sell its way out of its inventory overhang rather than cut production to reduce oversupply," industry analyst John Casesa of Merrill Lynch & Co. said in a research note yesterday.
