The > Automobiles > Sales Off Again at Ford and G.M; 2 Foreign Rivals Up

ETROIT, June 1 - Even though General Motors and Ford Motor continued to have difficulty selling cars, they did narrow their losses last month. Toyota and Nissan, meanwhile, continued to post healthy sales gains.

For the industry, sales of cars and trucks in the United States were down slightly, to about 1.5 million vehicles. According to Wards AutoInfo Bank, Americans bought 0.3 percent fewer vehicles than they did last May.

Sales at G.M. were down 5.4 percent compared with May 2004. At Ford, they were down 2.7 percent. By contrast, sales at Toyota increased 7.8 percent over last May, and Nissan was up 15.5 percent.

As the disappointing sales numbers rolled out of Detroit on Wednesday afternoon, General Motors and Ford, the nation's two largest automakers, both announced discount programs that they hope will help rid inventories of excess vehicles. Both companies also said they would make fewer vehicles in the third quarter than they did last year. G.M. will trim production by 9 percent, and Ford by 2 percent.

General Motors on Wednesday said it would offer its employee discount, which can reduce the invoice price of a typical vehicle by hundreds of dollars, to all customers on nearly all models until July 5. G.M., which already offers some of the highest incentives in the industry, will allow customers to apply the employee discount on top of any other incentives.

Ford said on Wednesday that it would raise incentives on some of its slower-selling models like the Explorer and Expedition sport utility vehicles and the Focus sedan. On the Expedition, Ford will offer no-interest financing for up to five years and ,000 cash back. Previously, Ford offered a ,000 rebate on the Expedition.

Some industry analysts said they thought the latest incentives would serve only to compound a major problem that G.M. and Ford face in competing with Asian auto companies - that they rely too heavily on discounts to sell cars.

John Casesa, an analyst with Merrill Lynch, questioned G.M.'s chief industry sales analyst, Paul Ballew, on the logic of the automaker's new discount campaign. "It seems hard for me to understand how that could possibly be economical for you," Mr. Casesa said during a conference call on Wednesday afternoon.

Mr. Ballew responded, "When you do the math, you'll find it to be a good, compelling offer to the consumer while trying to strike the right balance from a financial standpoint."

According to preliminary data from Edmunds.com, G.M. actually spent less on incentives per vehicle last month compared with the same month a year earlier. In May, G.M.'s average incentive was ,611 a vehicle compared with ,923 in May 2004. Ford slightly increased its incentive spending from May last year, to ,942 from ,927.

Those figures far outweigh incentive spending by Japanese automakers, which Edmunds estimated to be ,068 last month.

The Chrysler division of the German automaker DaimlerChrysler, which was the only American automaker to post a sales increase, topped both Ford and G.M. in incentive spending last month with an average of ,991, according to Edmunds. That is a 20 percent increase over May 2004. Chrysler appeared to be unmoved by G.M.'s discount program. During a conference call on Wednesday, Chrysler's senior vice president for sales, Gary Dilts, said, "Bring it on" when asked how the program might affect Chrysler's sales.

Chrysler continues to be Detroit's best performer, with sales up 6 percent over last May. While sales dipped at both G.M. and Ford, their declines appear to have tapered off somewhat. In April, both companies had wider losses than they did last month, with G.M.'s sales down 7.7 percent from the previous April and Ford's sales down 5 percent.

In addition, Toyota and Nissan's sales gains have narrowed since April when both were up more than 20 percent. In April, Toyota's sales increased 21.3 percent, and Nissan's jumped 27 percent. For Honda, Japan's third major automaker, sales slipped 7.6 percent last month compared with a gain of 13.6 percent in April.

Nissan was more than happy with its 15.5 percent rise last month. Jed Connelly, senior vice president for sales at Nissan's North American operations, said, "It's a good place to be in."