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CNN Today

For Automakers, Good Year Ends in a Bad Way

Aired January 3, 2001 - 4:40 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOIE CHEN, CNN ANCHOR: Also on the money today and the economy, automakers have a clearer picture of how they fared in the year that just ended. They've released their auto sales reports for the year 2000, and the numbers reflect some good, some bad news from the automakers.

We get details from CNN's Detroit bureau chief, Ed Garsten.

(BEGIN VIDEOTAPE)

ED GARSTEN, CNN CORRESPONDENT (voice-over): A disappointing end to an otherwise outstanding year for the auto industry. GM, Ford and DaimlerChrysler all reported decreased sales in December as compared with December of 1999. GM sales dropped 18 percent last month, but only 1 percent for all of 2000. Ford saw a 14 percent decrease in December, but a 0.9 percent increase overall made it a record year for the No. 2 automaker.

There was no good news for DaimlerChrysler. The troubled U.S.- German company saw a 15 percent drop in sales in December, a 4 percent drop for the year.

Nevertheless, industrywide more cars and trucks were sold than ever before.

DAVID LITTMAN, COMERICA BANK: When you look at the entire calendar year, it was the record of all time, some 17.4 million units, completely eclipsing 1999's record of 17 million units.

GARSTEN: Why the year-end slump? The cumulative effect of several factors.

LITTMAN: No. 1, the high financing cost.

GARSTEN: Littman says that Wednesday's Fed rate cut lowers that obstacle, but that higher gas prices also discourage sales, costing consumers some $80 billion in disposable income. To jump-start sales, the auto companies took a major hit to their bottom lines by offering cash incentives as much as $2,500. They were enough to encourage some buyers.

UNIDENTIFIED MALE: The incentive is what really brought me in today. GARSTEN: The automakers all plan to extend cash incentives and lower finance rates for the foreseeable future. What's keeping them afloat is the fact that despite economic trends, their highest-profit products are still selling well.

UNIDENTIFIED FEMALE: I'm really looking for an SUV, because I'm sick of driving just a four-door sedan.

GARSTEN: But because of the high incentives, the automakers' hefty $7,000 to $18,000 profit on each SUV could be cut in half.

(on camera): So analysts say the bottom line for consumers in 2001 is that this will be a good year to find some very good deals on new cars and trucks as the automakers appear willing to make less money to sell more vehicles.

Ed Garsten, CNN, Detroit.

(END VIDEOTAPE)

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