Psst! Ford Cuts GM's Lead in Half in Sept.; GM Completes Acquisition of Sub-Prime Car Lender

GMandAmericredit1010Government/General Motors saw its total vehicle sales fall in September to 173,031 from 185,105 in August. At the same time, Ford's sales increased from to 157,327 to 160,375.

Thus, what was an almost 28,000-vehicle lead for GM in August shrank by more than half to less than 13,000 in September. No one has a crystal ball, of course, but if GM falls and Ford surges by similar amounts in October, Ford will become the top-selling brand in the USA.

Associated Press reporters Tom Krisher and Dee-Ann Durbin apparently believe that Ford's move to within clear striking distance of taking over GM is not news that anyone can use. They had their opportunities to mention the situation in their coverage today, and blew right by them.

Oh, and wait until you see what GM is doing to try to keep from losing its Number 1 status.

Here is some of what Krisher and Durbin disseminated (bolds and number tags are mine):

US auto sales remain sluggish despite new models

New models and Labor Day promotions didn't do much to fire Americans' appetites for new cars in September.

Sales at Chrysler and Ford rose slightly from August. They fell at General Motors and Honda and were flat at Toyota. Car companies say a recovery is still happening, but it's not as strong as they had hoped following a terrible 2009.

Expressed as an annual rate, September sales came in at a 11.76 million pace. That's up from a 11.47 million rate in August, but far below 2007's pre-recession total of 16 million. "We're not going to bust loose as you sometimes see after a downturn, but we'll see steady growth," said Don Johnson, GM's vice president of U.S. sales. [1]

... Sales dropped 4 percent from August to 958,966 cars and light trucks, according to AutoData Corp. While it's typical for sales to decline after Labor Day, this August was one of the weakest on record.

... So far, automakers have refused to pump up sales by offering big incentives, which was the usual tactic earlier this decade. Because car makers are now leaner and producing fewer vehicles, they aren't forced to use big discounts to move cars off lots. Incentive spending fell 3 percent from August to September to $2,683 per vehicle, according to auto pricing site TrueCar.com. [2]

But they'll try winning customers in other ways. GM has a new in-house car financing company and plans to offer new lease programs and target buyers with poor credit, a big part of the car buying market. [3]

Auto loans are still restricted for people with poor or mediocre credit scores, Ford's chief economist Ellen Hughes-Cromwick said. It will probably take a few years - and more job creation - for buyers with medium and poor credit to return to the new car market.

But loans are available to people with high credit scores because banks and finance companies are extending credit more easily after last year's all-out freeze, she said. [4]

Notes:

[1] - Of all the people to quote about "busting loose" and "steady growth," Krisher and Durbin picked the spokesman for GM, whose sales from August to September declined by 6.5%.

[2] - According to TrueCar.com's blog, GM vehicles occupied the top four spots in percentage vehicle discounts offered during September. The vehicles involved also appear to have MSRP's that are significantly lower then their direct competition. Additionally, TrueCar's month-earlier comprehensive report (go to Page 3 at this PDF link) indicates that Chevrolet, at 16%, had the highest overall discount level in the industry -- and they're still having a hard time keeping up their sales volume.

[3] - This bad-credit outreach is coming from a company owned by the same government which gave us the Card Act earlier this year.

For those who aren't familiar with it, that law, which is taking effect in gradual, ever more restrictive stages, has placed major restrictions on the amounts and types of credit that can be extended by certain categories of lenders, including the consumer finance arms of department stores and oil companies. It has imposed strict government-mandated credit-granting formulas on those lenders, who in turn have had to severely cut the credit lines of many customers -- not only of those who are clearly overextended, but even of those whose records have never been problematic.

Now GM, in an attempt to preserve what's left of its overall sales lead, has completed its purchase of "non-prime" lender AmeriCredit, is rebranding it as General Motors Financial, and will aggressively pursue granting credit to many of the same consumers/borrowers the government was allegedly trying to "protect" with the Card Act. You can't make this up.

[4] - Krisher, Durbin, and a large swath of the rest of the business press insist on perpetuating the myth of the "all-out freeze" on credit which has supposedly occurred at various times in the past two years (it seems to go all over the place depending on the whims of the reporters involved).

Let's be clear: With the possible (emphasis: possible) exception of a brief period during the fall of 2008, people with high credit scores have had no problem finding lenders willing to consider their applications, and have encountered few if any problems getting their credit applications approved. To prove otherwise, Krisher, Durbin et al owe us a procession -- not a few sob stories, guys, a real procession in the thousands at least -- of people with great credit who will attest to having been turned down, refused or couldn't find lenders who would even take their credit apps. I'm still waiting for the proof. I don't believe it will ever arrive, because it's not there.

I haven't been able to determine when October's auto sales announcements are coming out, and of course GM could have a good October and continue to keep Ford at bay. But wouldn't it be something if news that Ford has overtaken GM arrives on November 1, the day before Election Day?

Cross-posted at BizzyBlog.com.

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.