U.S. Car Makers Revive Incentives to Lure Customers

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Maybe some of those parents with kids still at home can't afford new cars because the big three U.S. automakers have posted lower sales figures for the month of May.

Jerome Vaughn, of Detroit Public Radio, reports.

Mr. JEROME VAUGHN (Reporter, Detroit Public Radio): Auto industry watcher John McElroy characterized May's lackluster auto sales this way.

Mr. JOHN MCELROY (Auto Industry Analyst): The consumer just sat on his hands for this month. I think consumers are waiting to see what's going to happen, especially with gas prices. But people stayed away in droves.

Mr. VAUGHN: The big three automakers again saw their sales dwindle in May. The world's largest automaker, General Motors, sold more than 345,000 cars and trucks last month, but that's a drop of nearly 16 percent from May 2005.

GM's Paul Bellew says there were a couple of factors holding down demand last month.

Mr. PAUL BELLEW (Executive Director, Market and Industry Analysis, General Motors): We've had an impact from the run-up in gas prices. That, coupled with higher interest rates, resulted in industry sales that were sluggish in May. And then we also saw the mix shift towards some car segments and away from some of the truck segments.

Mr. VAUGHN: Chrysler sales dropped 14 percent when adjusted for the number of selling days. Out of Chrysler's 21 models, only four saw improved sales in May.

Ford managed to offset lower demand for its trucks by getting more people to purchase cars. Overall, Ford's May sales fell nearly 2 percent.

GM and Ford have begun to offer special incentives to help potential customers get over their anxiety about gas prices. GM has begun subsidizing the cost of gas for purchasers of some of its larger cars and SUVs, but only in Florida and California. Ford is now giving customers a debit card to purchase up to $1,000 in gas.

John McElroy says he thinks it's a smart move.

Mr. MCELROY: People are going to use pretty much the same amount of gas they've always used. This is a way for GM and Ford, instead of giving rebates, to give the consumer something that they really want to have right now, which is relief at the gas pump.

Mr. VAUGHN: And the U.S. automakers may need all the help they can get. Toyota had its best U.S. sales month ever in May, selling more than 235,000 cars and trucks. Honda reported its best May ever, with sales jumping more than 11 percent over year-ago levels.

For NPR News, I'm Jerome Vaughn, in Detroit.

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