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GM, Ford See Fewer Bumps

By Rex Moore (TMF Orangeblood)
January 9, 2004

As "Hot Rod" Rick Munarriz pointed out on Monday, there's a bit of a spark in Detroit this week as manufacturers gather for the 2004 North American International Auto Show. With the economy thawing out and some interesting new models hitting the showrooms, carmakers are as optimistic as they've been in years.

Today, Ford (NYSE: F) added to the fun by saying it expects profits of $1.20 to $1.30 per share this year, about 12% to 21% higher than in 2003. That followed a similar growth forecast from rival General Motors (NYSE: GM) yesterday. Both companies -- and the last of the Big Three, DaimlerChrysler (NYSE: DCX) -- are encouraged by a sales uptick at the end of last year. Also telling is the fact that results overseas are on the rebound.

The only piece out of place here is GM's announcement that it will offer 0% financing or rebates on most of its new vehicles through March 31. If there truly is optimism at the world's largest automaker, it's hard to see why it would yet again start chipping away at profit margins. Why not bite the bullet and drop the incentives? If sales do start to wane, there's always time to restart the program.

So far, Ford and DaimlerChrysler have yet to follow suit this time around. As for Japanese competitors Honda (NYSE: HMC), Toyota (NYSE: TOYOF), and Nissan (NYSE: NSANY), they've largely managed to stay above the 0% fray.
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