Ford June Sales Fall 11%, Prompting No-Interest Loans
By Alison Fitzgerald
Detroit, July 2 (Bloomberg) -- Ford Motor Co.'s U.S. sales fell 11 percent in June as rivals offered steeper discounts, prompting the second-largest automaker to revive no-interest loans to spur demand. Sales fell 3.6 percent at DaimlerChrysler's Chrysler unit.
Ford sold 337,300 vehicles including imports and heavy-duty trucks, with sales down 11 percent for both car and truck models, Ford said in a statement. Chrysler said it sold 202,922 vehicles, with cars down 12 percent and trucks little-changed.
Ford, trying to recover from losses in 2001 and the first quarter, was hurt in June partly because it declined to match incentives offered by rivals General Motors Corp. and Chrysler. The Dearborn, Michigan-based company and General Motors both said today they will resurrect the no-interest loans that pushed industry sales above forecasts after Sept. 11.
``The auto companies have put themselves in a Catch-22 -- they've put the expectation in people they should get an incentive,'' said Brian Bruce, who manages $13 billion for PanAgora Asset Management, which owns Ford, General Motors and DaimlerChrysler shares.
General Motors is forecast to report later today that June sales rose 3.7 percent as industrywide sales were little-changed from June 2001, the average estimate of five analysts surveyed by Bloomberg News.
Ford's shares slipped 12 cents to $15.40 in midday trading. General Motors declined 87 cents to $49.95 and DaimlerChrysler's U.S. shares dropped $1.51 to $45.51.
Dearborn, Michigan-based Ford's sales have now declined 10 percent or more in five of this year's first six months. Ford's 11 percent decline was deeper than the 6.1 percent analysts had forecast.
``Those guys have been losing market share all year,'' said Rod Lache, an analyst at Deutsche Bank Securities who rates the automaker a ``market underperform'' and doesn't own its shares.
The Explorer sport-utility vehicle fell 7.1 percent and the F- Series pickups dropped 16 percent. Those models, which over the past few years have been among the automaker's most profitable, now face more competition from rivals including General Motors and Toyota Motor Corp.
Sales of Ford-brand cars and trucks, which provide the bulk of the automaker's sales volume, fell 12 percent and sales of the Lincoln luxury brand fell 16 percent. Mercury sales rose 4.2 percent, adjusted for an additional sales day in the June 2001.
Sales of Ford's U.K.-based Jaguar and Land Rover brands also increased helped by new models.
General Motors and Ford, which both had 12 percent sales declines in May, revived zero-percent financing on some models today. Under the program, buyers who qualify can take out loans for as long as five years without having to pay interest. Most of the loans are offered for three-year terms.
General Motors introduced no-interest loans after the Sept. 11 attacks, and industrywide sales beat forecasts over the next six months. General Motors dropped the plan in April and its sales plunged 12 percent in May.
Automakers offer no-interest loans mainly for their drawing power when sales are slow. The companies are willing to forgo some profit on each sale if it means they can move more vehicles. Many buyers either can't qualify for the loans or choose cash rebates instead because they can't afford to pay off the loans in three years.