(Adds details of Singles Day in China, updates November U.S.
auto sales forecast)
By Bernie Woodall
DETROIT Nov 23 Automakers in the United States
are ramping up holiday sales promotions ahead of Black Friday,
aiming to clear out bulging inventories of unsold cars and
dispel investor doubts about consumer demand.
Detroit automakers need a strong year-end sales push. They
are sitting on hefty inventories of unsold sedans, compact cars
and sports cars as consumers shift to pickup trucks and SUVs.
The share prices of General Motors Co, Ford Motor Co
and Fiat Chrysler Automobiles NV are
flat to down for the year. This reflects investor concerns that
a six-year auto sales boom in the United States is reaching an
end and that sustaining sales levels will require more
aggressive price cutting.
"We are seeing a tougher pricing environment, higher levels
of discounts," said Ford Chief Executive Officer Mark Fields. He
predicted November and December sales would be about the same as
a year ago, when the annualized sales pace averaged about 17.9
million vehicles a year.
Ford kicked off its Black Friday sales promotions in early
November, after reporting an 11.7 percent drop in October sales.
Rivals have since followed suit. GM's GMC truck brand is
promoting "Black Friday All Month Long" with discounts of as
much as 20 percent off list prices for pickup trucks.
Luxury automakers usually join the fray in December. Toyota
Motor Corp's Lexus brand began touting its annual
"December to Remember" deals ahead of Thanksgiving weekend,
offering 0.9 percent, five-year loans or $1,000 off on its
compact IS 300 sedan in certain markets.
GM this week began offering markdowns on the Chevrolet
Corvette sports car through retailer Costco Wholesale Corp's
car-buying club, the first time the Corvette has been
offered through the discount retailer's car buying service.
At the start of the month, there were 122 days of Corvette
inventory, up 51 percent from a year earlier and nearly double
the level automakers consider ideal, according to Automotive
Like other retailers, automakers use holiday-themed
promotions to boost sales during the final two months of the
year, and like Wal-Mart Stores Inc, Target Corp
and Amazon.com Inc, automakers have steadily expanded
the Christmas season over the past several years.
The concept of winter holiday sales is going global. Black
Friday car deals came to Britain about six years ago. In China,
automotive marketers target customers on Singles Day, Nov. 11,
led by Alibaba Group Holding.
Singles Day has become the largest shopping day of the year
as Alibaba encourages vendors on its sites to offer heavy
discounts on items from cars to clothing.
Automakers in the U.S. market will report November sales on
Dec. 1, and analysts expect an increase in total U.S. auto sales
from a year ago. The annualized sales pace could drop, however,
to 17.9 million vehicles, according to J.D. Power and LMC
Automotive. A year ago, the annualized selling rate
for November was 18.25 million vehicles, according to Autodata
A factor working in the automakers' favor is the advanced
age, 11.6 years on average, of the U.S. fleet of 264 million
It is unclear to what extent automakers will offer deeper
discounts overall in the coming weeks or repackage existing
deals with holiday bows.
J.D. Power data on new-vehicle discounts provided to Reuters
shows that on average GM discounts grew 1 percent in October
from a month earlier, to $4,700 per vehicle, while Ford's
average discount fell 10.6 percent to about $4,400 per vehicle.
Fiat Chrysler's October discounts were flat at $4,920 in October
from September, according to J.D. Power. But the company offered
$7,800 or more off its top-seller, the Ram 1500 pickup truck.
"Incentive levels are near record highs as a percentage of
the selling price," said Jeff Schuster, lead forecaster for LMC
Automotive, an automotive consultancy.
At the same time, Detroit automakers are cutting production.
Both GM and Ford recently announced production cuts. GM
announced indefinite layoffs for 2,000 workers at two U.S.
factories that build various car models. Ford ordered temporary
(Additional reporting by Alexandria Sage in Los Angeles,
Catherine Cadell in Beijing and Costas Pitas in London; Editing
by Cynthia Ostermanand Jonathan Oatis)