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US market poised for first growth in four years

Economists from the major US vehicle manufacturers and financial institutions at the Society of Automotive Analysts' Detroit auto show round table yesterday suggested that US vehicle sales this year may grow to record levels, though there are doubts that rising sales will make the manufacturers significantly more profitable.

2003 sales of 16.7 million light vehicles were only 3.5 per cent below the record of 17.3 million in 2000, thanks to the use of incentives, which grew on average in the year from $1,409 to $2,386 per unit.

The Detroit News reported that in the unlikely event that prices were to continue falling at current rates - and the economy goes into overdrive - sales could soar to as high as 17.7 million units, according to Van Jolissaint, the Chrysler Group economist. More likely, he said, is that prices - adjusted for added vehicle features -- will not fall as much this year as in recent years, and that light-vehicle sales will rise no more than 500,000 to 17.2 million units.

GM economist Mustafa Mohatarem noted the effect on the group's domestic sales of the persistent purchasing of US Treasury securities by central banks in Japan and China to make their currencies less valuable against the dollar - and their companies' products cheaper to sell in the US.

Against that kind of competition, he said, US automakers must keep cutting prices with incentives. For its own part, GM has just introduced a 'Hot Button' marketing programme featuring the largest vehicle giveaway in history in a two-month period.

US consumers will have an opportunity to win one of 54 different GM vehicles simply by visiting their local participating dealership and pushing the OnStar "Hot Button" in a specially designated vehicle. GM is giving away 1,000 2004 vehicles over the next 54 days with a total value of the prizes reaching approximately $25 million.

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