Automakers seek to cut
inventories with Black Friday, holiday promotions
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[November 23, 2016]
By Bernie Woodall
DETROIT
(Reuters) - 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.
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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 News data.
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.
GOING GLOBAL
The concept of winter holiday sales is going global. In China,
automotive marketers target customers on Singles Day, Nov. 11,
piggy-backing on promotions led by internet retailers such as Alibaba.
Black Friday car deals came to Britain about six years ago.
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![](../images/112316pics/busine39.jpg)
Mark Fields, President & CEO, Ford Motor Company, speaks at the Los
Angeles Auto Show in Los Angeles, California, U.S. November 15,
2016. REUTERS/Lucy Nicholson
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Automakers 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 17.7 million vehicles, according to WardsAuto.
A year ago, the annualized selling rate for November was 18.25 million
vehicles.
A factor working in the automakers' favor is the advanced age, 11.6
years on average, of the U.S. fleet of 264 million vehicles.
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.
![](http://archives.lincolndailynews.com/2016/Nov/23/images/ads/current/christian_village_sda_031616.png)
![](http://archives.lincolndailynews.com/2016/Nov/23/images/ads/current/ldn_business_directory_small_2016.png)
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 layoffs.
(Additional reporting by Alexandria Sage in Los Angeles, Catherine
Cadell in Beijing and Costas Pitas in London. Editing by Joseph White
and Cynthia Osterman)
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