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The next steps automakers could take after sales drop again in April

DETROIT (Reuters) - Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down. The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But two straight weak months has heightened Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since the Great Recession's end in 2010. Auto sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at an annual rate of just 0.7 percent according to an advance estimate published by the Commerce Department last Friday. Excluding the auto sector the GDP growth rate would have been 1.2 percent. Industry consultant Autodata put the industry's seasonally adjusted annualized rate of sales at 16.88 million units for April, below the average of 17.2 million units predicted by analysts polled by Reuters. General Motors Co shares fell 2.9 percent while Ford Motor Co slid 4.3 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.2 percent. The U.S. auto industry faces multiple challenges. Sales are slipping and vehicle inventory levels have risen even as carmakers have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars. The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs? To bring down stocks of unsold vehicles, the Detroit automakers need to cut production, and offer more discounts without creating "an incentives war," said Mark Wakefield, head of the North American automotive practice for AlixPartners in Southfield, Michigan. "We see multiple weeks (of production) being taken out on the car side," he said, "and some softness on the truck side." Rival automakers will be watching each other to see if one is cutting prices to gain market share from another, he said, instead of just clearing inventory. INVESTORS DIGEST BAD NEWS Just last week GM reported a record first-quarter profit, but that had almost zero impact on the automaker's stock. The iconic carmaker, whose own interest was once conflated with that of America's, has slipped behind luxury carmaker Tesla Inc in terms of valuation.

Now at Costco: Bales of toilet paper and a Volvo or Pacifica to haul them

Costco, the beacon of bulk buying, where you can buy everything from gasoline to your own casket at deep discount, is offering some Costco-only incentives through its Auto Program in partnership with specific car brands: for now, Volvo and Chrysler, with other brands planned for later. First, Volvo: Now through Oct. 2, you can get both special incentives AND employee pricing (aka "A-Plan" pricing) AND whatever rebates and incentives Volvo might already have going on. The Costco incentives are: $3,000 on 2017 and 2018 S90 sedans. $750 on 2017 and 2018 S60 sedans. $750 on 2017 and 2018 V60 and V90 Cross Country wagons. $750 on 2017 and 2018 XC90 SUVs. $750 on the outgoing 2017 XC60 crossovers. Automaker incentives usually vary by region, but in the Detroit area, at least, Volvo currently has a $2,500 incentive on the 2018 XC90 and $3,500 on the 2017 model. Those end Aug. 31 but could be renewed in September, and others could be added then as well. Volvo is also offering special interest rates on financing some of the other models. And when all is said and done, if you fill out a Costco customer survey you'll get a $200 cash card. The Chrysler Pacifica deal, also through Oct. 2, is even simpler: Go to the Costco site, print out a certificate worth $1,000, and take it to a Chrysler dealership — any dealership, not just those that usually work with Costco, which is a first. The incentive covers both 2017 and 2018 models. And like the Volvo promotion, these Costco incentives can be combined with whatever Chrysler's doing — and it currently has a myriad of incentives on 2017 Pacificas, in various combinations that differ depending on whether you're leasing or buying. If you register at the Costco Auto Program website, you'll be put in touch with a dealer who can review the bottom line after all the discounts are factored in. Participating dealerships have offered special pricing to Costco members for years, up to the price automaker employees get. Costco's program doesn't typically work the way these Volvo and Chrysler programs do, though a similar joint promotion with Volvo back in 2013 sold 7,500 cars. If you haven't used the Costco Auto Program, but you don't like haggling at a dealership, you might give it a try. The beauty of it is that a dealer is obligated to offer you a set price and is also obligated to treat you by certain rules, such as not trying to upsell you. Last year, 490,000 vehicles were sold to Costco members through the program.

Marchionne says Fiat Chrysler can make 6 million cars per year

The combined Fiat Chrysler Automobiles will see its production capacity increase from a projected 4.6 million in 2014 to 6 million units once it completes its integration, according to statements made by FCA CEO Sergio Marchionne.
"With the initiatives we will announce in May, six million is accessible," Marchionne said during a Fiat shareholders' meeting in Turin, according to The Detroit News. Marchionne is aiming to complete the merger between the Turin, Italy-based Fiat and the Auburn Hills, MI-based Chrysler by the end of this year.
Increasing production by 1.4 million units is no small order, particularly when combined Fiat and Chrysler sales have increased only modestly in the past few years - only 4.4 million units were sold in 2013, and while 4.6 million is projected for 2014, 4.5 million is also a distinct possibility. Six million units per year has been Marchionne's self-imposed goal for the combined automaker, according to The News, claiming that FCA would need to crest that point to achieve profitability.