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US Auto Industry Sets Near Record in Sales - 2002-01-07

Faced with a faltering economy and the shock of the September 11th terror attacks, the auto industry in 2001 countered with the second-highest U.S. auto sales record in history - 17.2 million cars and trucks.

It was an extraordinary performance, fueled by big cash rebates and cheap loan deals, "0 percent financing", during the year's final quarter.

For the first time, light trucks, pickups, minivans and sport utility vehicles outsold cars in America. Trucks took 51 percent of the market. The rise of trucks in popularity has been a long-term trend that shows no sign of faltering.

For the year, Chrysler sales dropped by just less than 10 percent. General Motors' sales were off by about 1 percent and Ford's dropped by 6 percent.

Ford F-series pickup trucks remained the best-selling vehicles in the U.S.

A pair of Japanese brands did well: Honda set a sales record for the year and their Accord mid-size sedan replaced the Toyota Camry as the best-selling car. Toyota set an annual sales record and its upscale Lexus line was the best-selling luxury brand.

Germany's BMW also set a sales record for the year and moved past Mercedes-Benz to become the number two luxury brand in America.

South Korea's Hyundai continued its rapid rise in the American marketplace. Annual sales were up 42 percent, and its subsidiary Kia saw a more than 40 percent rise. Both have made substantial inroads in the economy car market and are now expanding upward with larger, more expensive vehicles. Their competitors are not laughing anymore.

But 2002 has many analysts worried. They are concerned that perhaps a half million sales in late 2001 were "pulled ahead". That is, they were sales made to people who would have bought vehicles in 2002, but moved up their purchases to take advantage of relative bargains.

Automakers are fearful that the first half of this year will see their dealers' showrooms deserted as customer demand has been satisfied.

The manufacturers are trying to figure out how to attract buyers now that 0 percent financing has run its course. General Motors, which launched the 0 percent idea, has begun a cash rebate program, offering $2002 to buyers of any 2002 model.

General Motors is the healthiest of the American automakers financially and can best withstand the reduced profitability caused by the big incentive programs. Ford and Chrysler reluctantly adopted 0 percent financing to stay competitive. Some suggest General Motors is just putting pressure on the weaker Ford and Chrysler to, as one analyst put it, "take advantage of the situation."