Winter storms put chill on car sales

 Winter storms put chill on car sales
After falling 3% in January, auto sales were unchanged at about 1.2 million vehicles in February, unchanged from the same month a year earlier, according to Autodata Corp. Above, a salesmen digs out cars covered in snow at a dealership in Indianapolis. (Michael Conroy, AP)

The winter chill on auto sales is melting into a buyers market.

Dealer inventories have ballooned with the frigid weather across much of the nation in January and February. So automakers are turning to a tried-and-true method to move sheet metal — discounts.


"If you are thinking about buying a car, now is the time to do it," said Scott Painter, chief executive of auto shopping information company

After falling 3% in January, auto sales were unchanged at about 1.2 million vehicles in February, unchanged from the same month a year earlier, according to Autodata Corp.

The car companies blamed the weather and said sales will improve this month.

"Car buying is an outdoor shopping experience. It is not like going to a Macy's," said Jessica Caldwell, an analyst with auto information company "We have seen sales spikes in between the storms and whenever the weather warms up for a few days."

But as winter warms into spring, here's what the automakers are facing.

Ford ended the month with nearly 700,000 vehicles in its stockpiles, a 91-day supply. That's up from just 71 days at the same time a year earlier.

Chrysler finished the month with an 85-day inventory, 546,107 vehicles, up from 71 days in February 2013.

GM has almost 806,000 vehicles on hand, an 87-day supply. A year ago that was 79 days.

The industry-wide inventory has risen 7.5% from a year earlier to just shy of 3.5 million vehicles available for sale across the U.S., according to auto price information company Kelley Blue Book. That's about a 68-day supply, up from 56 in February of 2013.

"Inventories of vehicles sitting on dealer lots have not been as high for many years," Painter said.

Painter said shoppers should see "some really good deals" this month.

Chrysler's Ram pickup is already selling for about $5,600 off its sticker price, according to TrueCar's analysis. Cadillac is selling its ATS sports sedan at about a $5,000 discount. Ford has knocked about $2,500 off its Fusion family car. Nissan is selling its small Juke crossover at about $2,600 below the suggested price, and even Toyota is discounting a version of the Prius by almost $1,900.

Kelley Blue Book is projecting that on average, automakers will offer discounts averaging $2,700 per vehicle this month.

Automakers are hoping a strong March sales rebound will bleed off the excess inventory.


"From our standpoint, an 87-days inventory is pretty manageable, especially when you have such a positive outlook for sales this year," said James Cain, a GM spokesman. "We are not going to overreact."

GM forecasts total industry sales of 16 million to 16.5 million vehicles this year, which would make it the best year since 2007.

GM's average sales incentive last month was about 5% less than a year ago, according to TrueCar.

That's a prudent approach, Caldwell said.

"Automakers need to think about this long term," Caldwell said. "I don't think they should start a price war or cut auto production just because of a month or two of slow sales that have pushed up inventories."

Painter also is expecting a rebound.

"We will have a booming spring, not doubt," Painter said. "Interest rates aren't moving up appreciably, and all the machinery that feeds car sales are still in shape. This is just a weather-driven event."

Small sport utility vehicles and four-wheel- and all-wheel-drive vehicles sold best in February, in part because they were the types of autos best matched to the severe winter conditions in much of the nation, automakers said.

GM's U.S. sales fell 1% to 222,104 vehicles last month compared with February a year earlier, according to AutoData.

Ford sales fell 6.1% to 183,349 vehicles in February.

"Sales surged in the final week, providing us momentum after a slow start to the month," said John Felice, Ford vice president of U.S. marketing, sales and service.

Chrysler, which has a high percentage of truck and SUV models, did the best of the domestic auto companies.

Chrysler sales rose 11.4% to 154,866 vehicles, the company's best February since 2007.

Toyota sales fell 4.3% to 159,284 vehicles compared with the same month a year earlier. Honda sales fell 7% to 100,405 vehicles.

Nissan's sales rose, up 15.8% to 115,360 vehicles.

Subaru, known for all-wheel-drive vehicles, is also on the upswing and has become the fastest-growing major car brand in the United States. February sales rose 24%. Its Forester SUV sales nearly doubled and now account for about a third of Subaru's business. The brand is gaining share from the other car companies. About 60% of Subaru buyers are new to the nameplate.

Sales for the entire industry should bounce back — and automakers will feel the pressure if they don't, said Karl Brauer, an analyst at Kelly Blue Book.

"If consumer activity doesn't pick up in the next few weeks," he said, "we'll likely see an aggressive, industry-wide incentive program that could hurt profitability."

Twitter: @latimesjerry