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The Honolulu Advertiser
Posted on: Wednesday, September 5, 2007

Consumers may benefit from GM's loss

By Martin Zimmerman
Los Angeles Times

Heavy discounting by Japanese car companies put a dent in U.S. automakers' sales last month — especially at General Motors Corp. — and could signal good times ahead for consumers.

"The remainder of the summer is going to be a buyer's market, because GM isn't going to just sit back and do nothing," Jesse Toprak, an analyst with Edmunds.com, said yesterday after the major automakers released their June sales reports.

"They've got to retaliate in terms of incentives, and that's going to cause a chain reaction."

GM sales plummeted almost 22 percent in June, its brands suffering across the board with double-digit declines at Buick, Cadillac, Chevrolet, GMC and Pontiac. The automaker blamed a planned cutback in low-profit fleet and rental sales for the decline, although it conceded that competitors grabbed sales by offering richer incentives.

Japanese automakers offered an average incentive of about $1,500 per vehicle last month, compared with $1,260 a year ago, according to www.Edmunds.com, a Santa Monica, Calif.-based auto research firm. Average incentives offered by domestic automakers, while much higher at $3,200 per vehicle, fell 7 percent from a year ago.

Toyota Motor Corp. in particular shook up Detroit by offering zero-percent financing and cash rebates on its redesigned Tundra full-sized pickup. Eager to capture a significant share of the large pickup market, Toyota offered the incentive package in an effort to fulfill its goal of selling 200,000 Tundras this year.

The tactic seemed to work. Tundra sales jumped 146 percent last month, while sales of GM's flagship full-sized pickups — the Chevy Silverado and GMC Sierra — tumbled more than 20 percent.