S&P: GM, Ford sales strong

Standard & Poor's said the "Employee Discount" program implemented by General Motors Corp. and Ford Motor Co., in particular, resulted in surprisingly strong sales in June and July and enabled the automakers to reduce excess dealer stock, according to the "Industry Report Card: Global Automakers."

Despite the benefits of the discounting program, automakers, especially GM and Ford, could find it difficult to transition to "value pricing," as GM has extended the employee discount program through September and has added certain 2006 models to the plan, the report said.

In the absence of substantial escalation of discounting, industry sales could weaken precipitously for the balance of the year, S&P said, adding for commercial trucks in the United States, it expects full-year sales for 2005 to be up at least 20%, reaching a robust 235,000 or more units. Sales are being boosted mainly by relatively solid U.S. economic conditions and continued replacement demand.

It is expected, however, that a cyclical downturn will occur in late 2006 or early 2007, the agency added.

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