Auto woes downplayed at Las Vegas convention

Thursday, Nov. 7, 2002 | 11:21 a.m.

Auto executives downplayed a plunge in car sales as industry leaders gathered in Las Vegas for a major car aftermarket products convention.

A series of meetings and conferences were scheduled in Las Vegas this week around the Specialty Equipment Market Association and the Automotive Aftermarket Products Expo. The events run through Friday and more than 80,000 people are attending the shows, headquartered at the Las Vegas Convention Center.

Other smaller industry events are being conducted across the city at the same time.

Industry leaders are literally and figuratively kicking tires at the events, which showcase products and services associated with a variety of motor vehicles.

Hundreds of cars and trucks are on display at the city's convention venues as exhibitors show off their products on dozens of concept cars.

Industry leaders are gathering at a time when car sales in nearly every category showed double-digit percentage declines in October from the same month in 2001. But industry leaders say the comparisons are practically meaningless because October 2001 was the biggest sales month in history. The reason: The industry responded to the Sept. 11 terrorist attacks with the most widespread use of financing incentives and buyers responded.

"When we announced October sales, it looked like we needed to take a vitamin pill," said George Pipas, Ford Motor Co.'s U.S. sales analysis manager. "But the fact is that we had a tall chinning bar from last year."

Ford's sales for October were down nearly 35 percent to 287,975 units, while No. 1 General Motors' sales were off nearly 32 percent to 391,070 vehicles.

"October was payback time," Pipas said from Ford's Dearborn, Mich., world headquarters. "Admittedly, sales were weaker than expected, but looking at October in isolation is not going to show the whole picture."

He said the industry is on track to have one of its five best sales years.

Pipas explained that after sales plummeted following the terrorist attacks, consumers came back strong when dealers offered 0 percent financing incentives.

"Looking at the broader picture, we're pleased with our overall performance for the first 10 months of the year," said Bill Lovejoy, group vice president of GM North America vehicle sales, service and marketing, in a statement the company issued when it announced its October sales.

While GM and Ford sales were down compared with September 2002 totals, Pipas explained that many customers who normally buy new-model cars took advantage of July and August incentives to buy the last line of the 2002 models.

"GM threw gasoline on the fire in the summer in an effort to stimulate sales before the introduction of the 2003 line," Pipas said. "Sales in July and August were much higher than expected when 0 percent financing made a cameo appearance again."

Both GM and Ford have extended their 0 percent financing offers through January on many models to stimulate sales through the end of the year.

Regardless of the positive outlook, Standard & Poor's reduced GM's credit rating and is reviewing Ford's rating. Wall Street analysts responded by reducing both companies' earnings estimates and UBS Warburg issued a report expressing concern for GM's long-term outlook.

The report said GM's massive pension fund liability was a concern and the economic climate was uncertain because of a possible attack on Iraq and what that would do to fuel supplies and prices.

Although the industry's outlook may be uncertain, its enthusiasm for unveiling exotic concept cars at SEMA is thriving.

Among them is a Lucchese Special Edition Suburban to be marketed to high-rolling customers that include clients who sport Lucchese apparel.

The Suburban has two-tone leather, ostrich leather inserts on the doors and sterling silver and walnut trim.

Lucchese President and Chief Executive Officer John Tillotson said the car, on display at the Convention Center, was a huge hit at the month-long Texas State Fair, where 4 million people saw the vehicle.

GM executive Jon Moss said his company and Lucchese partnered on the vehicle and have yet to price it, although they expect Lucchese boot customers in Hollywood and Texas ranchers with a flair for the exotic would be willing to put down more than $50,000 for the vehicle.