Incentives Up as Auto Sales Decline

Reuters reports, "U.S. auto sales tumbled in February in the face of a slumping economy and high gas prices with double-digit declines by all three struggling Detroit-based automakers."  Honda was the only major automaker to see sales growth last month.  Domestic brands were hit hard, in part, because of their reliance on full-size pickups and SUV sales.   The Detroit Free Press explains, "In this environment, consumers are clearly seeking out fuel-efficient cars.  Truck sales fell 11% in February, while car sales dipped just 1%."  Subcompact cars, on the other hand, "posted a 33% gain in the month."  While Ford and GM plan to respond to the news by slashing production of some vehicles, Chrysler has already announced new buyer incentives in a bid to boost sales.  "Chrysler plans to increase its incentive spending by 5% in March compared with February, including deals that offer a free Hemi engine with a Dodge Ram; 0% financing for 72 months on 2007 models; and 0% financing for 60 months on high volume 2008 models, Chrysler officials said."  The Los Angeles Times notes that, despite the increase in demand for small cars, "sales of the Toyota Prius and Honda Civic hybrid were down, a possible sign that consumers, facing rising inflation, declining purchasing power and gas prices well over $3 a gallon, were less willing to pay a premium for hybrids. Although both the Prius and Civic Hybrid get significantly better gas mileage than the Yaris or Fit (about 10 mpg more), they also are considerably pricier." 

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