U.S. light-vehicle sales rose a modest 4 percent to 1.19 million units last month, with Volkswagen AG, Ford Motor Co. and General Motors setting the pace as automakers overcame severe winter weather, higher taxes and rising gasoline prices to keep the industry’s recovery on track.
The results were in line with analysts’ forecasts and marked the second consecutive February -- traditionally a weak month -- that sales have topped 1 million units.
Industry sales have now advanced 8 percent through the year’s first two months, an encouraging sign as automakers approach the crucial spring selling season.
Light trucks led the industry last month with sales up 8 percent to 574,807 while car deliveries edged up to 617,492 units.
"Despite rising gas prices, severe winter storms and concerns about the federal budget, February was a good indication of the overall strength of the market," said Bill Fay, group vice president and general manager of the Toyota division, where sales rose 5 percent.
The seasonally adjusted sales rate for February --15.36 million – is slightly above January's 15.28 million rate and is up significantly from the 14.47 million sales pace in February 2011. It is the fourth consecutive month the SAAR has topped 15 million, the first such stretch in five years.
The SAAR remained above 15 million units every month for nearly 10 years until the streak was snapped in early 2008, just ahead of the industry’s collapse.
For the second consecutive month, Ford and GM gained market share after losing ground in 2012.
Robust car and SUV demand led Ford to a 9 percent increase in February volume, its fourth consecutive monthly gain. GM's deliveries rose 7 percent, its sixth straight monthly increase, with large trucks and SUVs driving much of the company’s latest results.
"The housing sector has now joined auto sales in propelling the U.S. economy forward," Kurt McNeil, head of U.S. sales operations for GM, said in a statement. "More importantly, the recovery in new home construction is reinforcing the underlying improvement in auto buying conditions, especially for pickups."
GM brands gain
GM's four brands each posted higher sales, with Cadillac volume rising 20 percent; Buick, 15 percent; GMC, 10 percent; and Chevrolet, 5 percent.
Ford said SUV deliveries rose 21 percent, paced by a 59 percent surge in Explorer volume, while car sales rose 6 percent.
Sales at the Ford division rose 11 percent, while Lincoln volume skidded for a sixth straight month, down 29 percent.
Toyota Motor Corp. said combined sales of the Toyota, Lexus and Scion brands increased 4.3 percent to 166,377 units. Volume rose 4 percent at Lexus.
At the Toyota division, truck sales -- buoyed by the Venza, Highlander and RAV4 -- advanced 16 percent while car sales slipped 3 percent, reflecting a rare dip in Camry and Prius deliveries.
Honda Motor Co. blamed winter storms in the Northeast for a 2 percent decline in its sales last month. At the Honda division, volume dropped 2 percent, while sales edged up 1 percent at Acura.
Chrysler Group, led by a 32 percent surge in car deliveries, posted a 4 percent February increase, its smallest monthly gain in nearly three years.
Nissan Motor Co. -- hurt by a slump in car and fleet deliveries -- reported a 7 percent drop, its fourth monthly decline since September.
Volkswagen AG said sales of VW-brand light vehicles rose 3 percent, its smallest monthly gain since January 2011, when volume edged up 2 percent.
At Chrysler, sales rose 30 percent at the Dodge brand, and 2 percent at Ram and Fiat. But volume slipped 7 percent at the Chrysler brand and 16 percent at Jeep, where sales have fallen five months in a row.
Still, Chrysler's U.S. sales have increased 35 consecutive months, matching a streak that ended in December 1994.
Overall, Chrysler's truck sales -- a stronghold for the company -- slipped 8 percent last month.
Chrysler attributed the drop in truck deliveries to discontinued output of the Jeep Liberty and the ongoing, cautious launch of the 2014 Jeep Grand Cherokee, Jeep Compass, and new 2013 Ram Heavy Duty truck line.
Chrysler Group CEO Sergio Marchionne previously warned the company's first-quarter production volume will be lower than the same quarter in 2012.
Reid Bigland, head of U.S. sales for Chrysler Group, said in a statement: "We expect to get our inventory gaps corrected over the next 90 days, resulting in additional products contributing to our growth."
Even with the modest lift in February sales -- the smallest monthly gain for the industry since volume rose 2 percent in April 2012 -- automakers remain bullish on the remainder of the year.
Executives with several automakers also downplayed the threat to industry sales from any automatic cuts in government spending beginning today.
“It’s inevitable there might be a slight, slight offset, but I think the positive factors” that are boosting auto demand “will overcome,” Ken Czubay, Ford’s vice president of U.S. marketing, sales and service, told reporters today.
“People quite frankly have become completely numb to that whole budget issue,” Al Castignetti, Nissan’s vice president of U.S. sales, told Bloomberg. “Consumer confidence is on the rise. People are taking advantage of the low interest rates.”
Ford said today it plans to build 800,000 vehicles in North America in the second quarter, up 9 percent, or 63,000 units, compared with the second quarter of 2012. The automaker left its first-quarter production plans unchanged.
Wider credit availability, low financing rates, new products and pent-up demand after several years of weaker sales continue to drive traffic and volume at new-car showrooms.
"We have the best financing available for our customers ever," Mike Jackson, CEO of AutoNation Inc., the nation's largest new-car retailer, told a J.D. Power & Associates conference last month in Orlando. "I go back to '08 and '09, and I couldn't get the Lord Above financed."
Low finance rates, more attractive lease offers and easing credit terms are also the primary reasons auto sales have rebounded faster than other segments of the U.S. economy, analysts say.
"A car remains a necessity for most Americans," analyst Peter Nesvold of Jeffries & Co. said in a recent report. "Fundamental demand drivers including an aged fleet, credit availability and improving housing sector remain in place."
The percentage of new-vehicle sales that were leases has exceeded 20 percent since the beginning of 2010 and has reached about 25 percent over the past three months, Kevin Tynan, a senior analyst at Bloomberg Industries, said in a report this week.
Banks reported the most common rate for a 48-month new-car loan was 4.82 percent in November, the most-recent reporting period. Lending rates have dropped from more than 7 percent before the Federal Reserve lowered its target interest rate to zero in December 2008.
"No industry has benefited more from the unfreezing of the credit markets than new and used vehicles," Tom Webb, chief economist of Manheim Consulting, said last month in a report. "Although the immediate goal of Federal Reserve actions was to lower long-term rates and support the mortgage market, it was auto-financing markets that enjoyed the first boosts."
Demand for pickups and other light trucks was particularly healthy last month despite the recent jump in gasoline prices. Kelley Blue Book says Detroit automakers offered up to $5,000 in cash rebates on full-sized pickups last month.
Analyst Jesse Toprak of TrueCar.com said pent-up demand for big pickups from small businesses also helped February sales and will remain a "critical factor in this year's continued recovery."
The steady spike in gasoline prices also boosted February sales of smaller cars and alternative-powered models such as the Ford C-Max and Chevrolet Volt.
VW reported sales of its TDI diesel models accounted for 22 percent of the brand's sales in February, an 11 percent increase over last year.
Prices for regular gasoline average $3.77 a gallon nationwide this week, up from $3.39 a gallon a month ago, AAA says.
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8/20/2014 10:21:13 PM
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