Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, August 25, 1993                   TAG: 9308250024
SECTION: BUSINESS                    PAGE: B-6   EDITION: METRO 
SOURCE: Knight-Ridder/Tribune
DATELINE: NEW YORK                                LENGTH: Medium

CAR SALES UP, BUT MAKERS SEEM WARY

But enthusiasm about the car-sales data was tempered by a Ward's Automotive Reports survey that revealed automakers have cut third-quarter production plans 5.4 percent, or 171,000 vehicles.

"Although today's [sales] numbers look better, you don't have ringing support from the industry itself about the current environment," said Michael Niemira, economist at Mitsubishi Bank Ltd.

Sales figures released Tuesday showed U.S.-made cars left dealers' lots at a seasonally adjusted annual rate of 7 million units in Aug. 11-20, up sharply from the 5.8 million-unit pace in early August.

The mid-August rate topped the 6.7 million-unit rate for July, but was below the post-recession high of 7.1 million units in June.

Light-truck sales came in at a 4.9 million-unit rate, up from 4.5 million in early August.

The planned production cutback, which Ward's said was mostly at General Motors, was puzzling in light of reports that the late swoon in auto sales was more a result of lean inventories than lackluster demand, said David Cohen, economist at MMS International.

If low inventories were indeed behind the slowdown, car makers could be expected to boost production plans, not cut them, he said.

"It's as if the industry is a little less sure of the environment," Niemira said. "They're not sure demand is really back."

GM underperformed the rest of the market; its market share in domestic cars dropped sharply to 36 percent from 42.3 percent in the first 10 days of August. That was the lowest share for GM since December. As late as mid-July, GM's market share of domestic cars was 48.4 percent, its highest in a year.

Average daily car sales for GM were up 0.2 percent in the second 10 days of August. Ford Motor Co.'s average daily car sales were up 6.8 percent. Ward's Automotive Reports estimated that Chrysler Corp.'s Average daily car sales were up 45.5 percent.

The big swings in market share suggest inventories were the big factor in the sales slump, making the production cutback even more disconcerting.

If implemented, the planned output of cars in the third quarter would do little to boost gross domestic product growth, Niemira and Cohen said. Car production had been counted on to provide a significant boost - perhaps as much as one percentage point - to the third-quarter GDP growth rate.