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Consumers seeking bargains head to troubled automakers

The word "bankruptcy" might be scaring away some potential buyers of General Motors and Chrysler vehicles, but for many consumers the word "bargain" has been a powerful lure.

While Ford Motor Co., which is not in bankruptcy, said Tuesday it had a relatively good sales month in May, Toyota, Honda and Nissan, which also might be expected to benefit from GM's and Chrysler's bad financial news, said sales fell by 40 percent, 41 percent and 33 percent, respectively, from a year earlier.

"There a lot of deal-seekers out in today's market - people looking for really good bargains," said Jeremy Anwyl, chief executive of the auto information company Edmunds.com Inc. "They're heading into GM and Chrysler showrooms in anticipation of a blowout price."

On Monday, as GM filed for Chapter 11 in Manhattan, Edmunds said that, based on an analysis of visits to its Web site, the number of people who intend to buy a vehicle from Chrysler, which filed for Chapter 11 protection April 30, rose 72 percent in May from the previous month.

And Edmunds said purchase intent for GM vehicles increased in the last two weeks in May by a weekly average of 11 percent and 4 percent, compared to the weekly average for April.

GM said Tuesday its May sales fell by 30 percent from a year ago. "It was a fair month," said Bruce Nesenger, president of Nesenger Chevrolet in Medford. Ford said it sales fell 24 percent from May of last year, while Chrysler's dropped 47 percent, but it attributed much of the drop to a decline in lower-profit sales to fleets.

Most carmakers said May sales improved over April's, and that included GM and Chrysler despite reports of their financial woes.

To help stimulate sales, Edmunds says, Chrysler was offering incentives worth an average of $4,159 per vehicle last month, while GM offered an average of $3,783. Japanese automakers, by comparison, spent $1,907 in incentives, Edmunds said.

Nearly every vehicle manufacturer has been hurt by the recession, which has pared U.S. auto sales to an annualized rate of less than 10 million cars and trucks - down from 13 million last year and more than 16 million in prior years.

GM, which is reducing its manufacturing and retail operations as a condition for government assistance, said Tuesday it will sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd. of China. GM is also trying to sell its Saab and Saturn brands and plans to discontinue Pontiac next year. - With AP

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