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AUTO SLAES REBOUNDING <br> INCENTIVES TEMPT BUYERS BACK INTO VEHICLE MARKET

Auto sales are showing signs of rebounding, more than two weeks after terrorist attacks dealt a blow to a critical component of the economy.

The Big Three automakers responded aggressively to the financial shock spawned by the Sept. 11 attacks, offering incentives such as zero-percent financing on a wide variety of vehicles to stir up enthusiasm.

Since the incentives were introduced, "business has been fantastic," said James Basil, president of Joe Basil Chevrolet. "Our showroom has been filled."

"We've had a lot of people coming in actually saying that while they don't feel particularly confident about buying a car, they're doing it because the president says that's what they should be doing," Basil said. "The incentives do help in the matter, too, for the customer."

Even before the attacks, many automakers and analysts were predicting that U.S. auto sales in 2001 would finish below last year's record total of 17.4 million units sold, but that it would still be the third best year ever.

Some are sticking by that forecast, despite fears of sinking consumer confidence. "(Auto sales) would have to fall pretty significantly for it to not be the third-best year in history," said George Hoffer, a Virginia Commonwealth University professor who tracks the auto industry.

September auto sales figures aren't yet available. Through August, new-vehicle sales at franchised dealers in Western New York were down 10 percent from the same eight-month period in August, according to the Niagara Frontier Automobile Dealers Association. National sales fell 6 percent in the same span.

Showroom visits and sales plummeted immediately following the attacks. J.D. Power & Associates reported that new vehicle sales on Sept. 11 fell 35 percent, compared with the average of the four previous Tuesdays.

But the sales slump was easing. J.D. Power reported that industrywide sales for last weekend were 11 percent lower than in the four weekends before the terrorist attacks. Power gathers its information from 5,000 dealers nationwide.

Some analysts predict that September auto sales nationwide could fall 20 percent from a year ago. Dealers say they're focusing on recovering lost business and assessing what the rest of the year might bring.

Following the attacks, sales at Towne Automotive Group fell by half as consumers backed off, said Tony Daily, general manager. By the end of last week, activity had picked up considerably, to about 85 percent to 90 percent of the normal level, he said. "There are signs of the initial shock wearing off and people returning to their normal lives."

Prior to the attacks, Towne's sales were 30 percent above last year and on track for a record year, he said. "This was certainly a setback, but it's not going to destroy the year."

Basil said he expected September sales at his dealership would finish nearly on par with the volume for August 2000, "which under the circumstances is very, very good."

Paul Stasiak, president of the region's dealers association, said the impact on auto sales "hasn't been the doom and gloom that everyone's predicted."

"The dealers aren't discouraged, honestly," Stasiak said.

While the new incentives will cut into the Big Three automakers' profits, that tactic is far less costly for them than idling assembly plants, Hoffer said.

Many North American auto assembly plants were idled for different amounts of time earlier this year as the automakers tried to reduce a glut of inventory on dealer lots. Dealer inventories have since stabilized.

With interest rates low, the new incentives aren't as costly to the automakers as they might appear, he said.

GM is offering zero-percent financing for 36 months on all of its 2001 and 2002 vehicles, through October. Ford is offering the same plan for everything in its lineup except the 2002 Thunderbird.

Chrysler has jumped on the bandwagon, but with some restrictions. Some models, including the PT Cruiser, Jeep Liberty and certain minivans, aren't covered by the plan. Unlike GM and Ford, its plan doesn't apply to 2001 Chrysler vehicles.

Hoffer described the incentives as "wild-card incentives," noting that especially in the case of GM and Ford, they're not targeting specific vehicles.

"Never has such a broad incentive been given on all new, new-model-year vehicles," he said.

e-mail: mglynn@buffnews.com

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