GM Will Be Aggressive on Incentives-US Sales Chief

By Jui Chakravorty Das

NEW YORK (Reuters) - General Motors Corp's GM.N March domestic sales are tracking similar to a year earlier, its U.S. sales chief said on Wednesday, adding the automaker would be aggressive on incentives to meet its sales targets for the year.

"Our business has improved from February. It's off to a better start," Mark LaNeve told Reuters in an interview on the sidelines of the New York International Auto Show.

GM's U.S. sales fell more than 16 percent in February, when adjusted for selling days.

"Sales through today are tracking like March a year ago," he said. "But with the uncertainty in the market, it's tough to calibrate how the month will end."

Sales were being driven by GM's new products, such as the Chevrolet Malibu sedan and the Buick Enclave crossover vehicle, he said and dealers were selling more than the company could produce.

"We've ramped up production in both," he said, adding that while backlogs were shrinking, it would only be in the second-half of the year that GM would be able to meet the demand.

Still, GM is struggling with the same headwinds facing the entire industry.

Industry-wide U.S. auto sales fell to 16.15 million vehicles in 2007, their lowest level in a decade, as higher gasoline prices combined with a weakening economy has caused people to delay purchases of big-ticket items.

Analysts and industry executives expect further declines in 2008, especially in the first half of the year.

J.D. Power and Associates revised its forecast of 2008 U.S. light vehicle sales on Tuesday to 14.95 million vehicles, down from its earlier estimate for 15.7 million.

But GM executives are banking on stronger demand in the second half of the year and sticking to their estimates of sales ranging between 15.5 million and 16 million units.

"I think (automakers) will be more aggressive on incentives to make sure sales don't fall that much," LaNeve said, referring to the J.D. Power estimate. "We will be aggressive to meet our internal sales targets, and I'm sure other (automakers) will do the same."

GM has spent "a little more" on incentives so far this month than in February this year and in March last year, attributing the increase to trucks -- a segment that includes pickups and sport utility vehicles, LaNeve said.

"The truck market is tough," LaNeve said. "The pricing is tough. And that will only start easing when the economy begins to get better, when construction starts up again."

Weak housing starts have hurt sales of pickup trucks, typically bought by construction workers, directly.