Automakers Face Trouble Down the Road

July 14, 1989

Report Outline
Special Focus

Introduction

After five years of record sales and profits, the auto industry has entered a slump. Dwindling sales and tougher competition are forcing automakers and their dealers to offer sharp discounts on new cars and trucks. The downturn comes at a difficult time for U.S. automakers, who still haven't convinced some American consumers that their products are as good as the imports.

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Overview

Low-interest financing, factory rebates, sweep stakes, prizes—automakers and dealers have inundated the airwaves for months now with a whole array of gimmicks to lure customers into their show rooms. And the sales pitches have by no means been limited to the low end of the market. Jaguar, long a symbol of exclusivity and British reserve, is offering $5,000 rebates on its luxury cars. Even some Japanese automakers are offering sales incentives. Nissan Motor Co., for instance, is offering factory rebates of $500 to $2,000 on its 1989 models.

If the automobile pitchmen sound somewhat desperate, it's because they are. After five years of record sales and profits, new-car sales in the United States slowed by 10.1 percent in the first quarter of 1989 compared with the same period last year. Sales of light trucks, which have enjoyed a boom in recent years, were down by 6.7 percent.

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