GM Paces Strong February for Detroit as Sales Soar 13%
Auto makers, led by a resurgent General Motors Corp., reported a 13% increase in February sales as the nation’s strong economy continues to prompt consumers to buy vehicles at a record pace.
GM, struggling to reverse market share losses, on Wednesday posted a surprisingly strong 17% increase in car and truck sales to 383,450 vehicles. The sharp gain is attributed partly to an aggressive incentive program recently offered to GM employees.
Analysts link the boom in auto sales to the nation’s buoyant economy: Job growth and income are up, unemployment is down, interest rates are low and consumer confidence is high.
In addition, new vehicles are more affordable than at any time since 1980. Competition is forcing manufacturers to lower prices or keep them in check. Incentives are also running at historically high levels.
“I can’t see anything on the horizon to ruin the party any time soon,” said David Healy, an analyst for Burnham Securities. “But I get nervous when I see such high sales numbers.”
GM, the nation’s No. 1 auto maker, said car sales surged 19% and light-truck sales 16% over the year-ago period. This follows solid increases, reported Tuesday, of 8% each for Ford Motor Co. and the Chrysler unit of DaimlerChrysler.
Of the major foreign-based auto makers, Toyota Motor Corp., Honda Motor Co., BMW and Volkswagen all reported double-digit sales increases. The sales gains were broadly shared, with only three of 24 auto makers reporting sales this week--Daimler’s Mercedes-Benz unit, Jaguar and Mazda--showing sales declines.
“It’s amazing,” said George Magliano, analyst for WEFA Group in New York. “Sales are exceeding all expectations by a wide margin.”
Light vehicles moved off dealer lots at a seasonally adjusted annual rate of about 17 million units. If sustained for the entire year--a prospect analysts see as doubtful-- sales would exceed the record 16 million units in 1986.
Consumer appetite for popular light trucks--sport-utility vehicles, minivans and pickups--continues unabated. Truck sales soared 17% for the month, to 620,037 units, while cars registered a 9% gain, to 670,658. Trucks accounted for 49% of the vehicles sold in the first two months of the year.
GM’s performance helped boost its market share to 29.7% last month from 28% in January. The auto maker’s goal is to grab 32% of the market this year. But GM executives are already signaling that the company may fall short if industrywide sales remain so brisk and competition so keen.
To pump up February sales, GM offered a broad array of incentives, including $1,000 rebates in the month’s final weekend to GM dealers, employees, retirees and their relatives. About 2 million individuals were eligible for the incentives, which are in addition to regular employee discounts.
“GM pulled out all the stops on advertising and incentive programs,” said Healy, who had expected the company’s sales to increase only 6% in February.
GM dealers in the Detroit area reported brisk business in late February as company workers and relatives rushed to take advantage of the generous incentive programs.
The incentives helped GM’s car sales, analysts said, particularly of mid-size models, such as the Oldsmobile Alero, Pontiac Grand Am and Buick Regal.
The company’s truck sales also picked up steam. Sales of the Chevrolet Silverado and GMC Sierra rose 18%. The pickups were introduced in the fall, but GM has had difficulty building enough to meet demand.
On the down side, Cadillac continues to struggle in the luxury market with its sales falling 9%. Saturn, GM’s small-car unit, saw sales fall 2% despite a strong showing by its new three-door coupe.
The strong industrywide sales continue the momentum from 1998, the second-best sales year ever. Analysts expect sales to remain strong into April but worry that the pace cannot be sustained much longer.
