By Paul Lienert
DETROIT (Reuters) - General Motors Co
Some of the heaviest discounts are being offered by Ford and Chevrolet dealers on full-size pickups - $8,000 and more on the 2014 Ford F-150 and $9,000 and more on the 2014 Chevrolet Silverado, according to Internet listings posted Thursday.
But U.S. dealers also are sweetening deals on a wider range of vehicles, from low-priced economy cars such as the Chevrolet Sonic to popular crossovers such as the Ford Escape, fueling fears of an escalating "discount war" among the bigger manufacturers.
The latest offers come as the Detroit automakers and a number of their competitors appear to have been slammed by a third straight month of extreme weather in many parts of the United States, causing inventories of unsold vehicles to remain at unseasonably high levels.
"We believe short-term pent-up demand is building, but it's difficult to know when it will be released," said analyst Joseph Spak of RBC Capital Markets. "It could be March or spread out over a few months (and) is also likely dependent on the weather."
Analysts polled by Reuters estimated U.S. vehicle sales in February will be relatively flat from a year ago, at around 1,196,000, representing an annualized rate of 15.4 million. After dismal sales in January, analysts had predicted an uptick in February.
The challenge for GM and Ford has been to maintain a delicate balance between pricing and discounts, one of the key incentives offered by the industry. This task is made a bit easier with big pickups, high-margin vehicles that traditionally provide the lion's share of pretax profit in Detroit.
Automakers were able to maintain record transaction prices in February, with the industry average topping $29,000, according to research firm J.D. Power.
GM, which introduced its redesigned Silverado and GMC Sierra pickups last summer, has seen the biggest gain - around $5,000 per vehicle - in truck prices from a year ago, according to research firm Kelley Blue Book.
Because it has been spending relatively less on incentives this year than Ford, GM's share of full-size truck sales has dropped several points to less than 35 percent.
GM spent an estimated $3,204 per vehicle in incentives in February, compared with $3,305 for Ford, according to research firm TrueCar.
That could change as GM phases out heavy-duty versions of the Silverado and Sierra this spring while building up production of redesigned editions.
Analyst Brian Johnson of Barclays Capital said U.S. vehicle inventories are down slightly from January, but so far the automakers have maintained relatively strong first-quarter production schedules.
"Should inventory levels remain elevated through April, we could see the issue addressed" via higher incentives or production cuts, Johnson said.
FURIOUS DISCOUNTING BY DEALERS
At the retail level, discounting continues at a furious pace, judging from dealer websites reviewed Thursday by Reuters.
Chevrolet dealers were offering promotional deals on a wide range of models as the GM brand wrapped up a nationwide Presidents Day sale and prepared for two new March promotions.
The new promotions are dubbed Chevy Truck Month and Chevy Open House, according to trade publication Automotive News. The March incentive programs are expected to provide discounts of up to $7,000 or more per vehicle, according to a GM source who declined to be named because the programs have not been formally announced.
A number of Chevrolet dealers in the meantime are offering even better deals, many of them over the Internet.
On Thursday, David Stanley Chevrolet in Oklahoma City, Oklahoma, advertised a 2014 Silverado for $27,900, or $9,260 off the sticker price.
In Chandler, Arizona, Thoroughbred Chevrolet advertised a 2014 Malibu sedan at $17,395, or $5,860 off sticker, and a 2014 Sonic hatchback for $10,495, or $4,500 off.
Ford has boosted and extended discounts on many of its U.S. models through March 31. The company now is offering rebates of up to $4,000 on the full-size 2014 F-150 pickup and as much as $6,000 on selected models such as the 2014 Focus Electric.
But Ford dealers across the United States continue to advertise even steeper discounts on the Web.
Hall Ford Lincoln in Newport News, Virginia, on Thursday was offering a 2014 Ford Taurus Limited sedan for $34,000, a discount of $6,090 off the suggested retail price, and a 2014 Escape SEL crossover for $29,000, a discount of $5,600.
Brandon Ford in Tampa, Florida offered deep discounts of up to $7,200 on the 2014 F-150 pickup and $8,360 on the heavy-duty F-150.
Will the discount wars continue beyond March? That depends on the weather and on whether a "bounceback" in demand materializes, analysts said. As RBC analyst Spak noted: "Incentives, once introduced, can be hard to pull back."
(Editing by Matthew Lewis)