Ford sales leap 43% in February as Toyota’s drop 9% amid recall woes

Robust February sales pushed Ford Motor Co. to the top in U.S. auto sales, surpassing arch rival General Motors Co. for the first time in more than a decade.

Ford made its gains during a month roiled by severe weather in much of the country and by new revelations about Toyota Motor Corp.'s safety defects, including a public apology by top executive Akio Toyoda. Toyota said Tuesday that it would use a combination of no-interest financing and cut-rate lease pricing to regain customers driven away by its turmoil.

Ford’s sales rose 43%, bolstered by strong business with rental car companies as well as commercial and construction fleet customers. The Dearborn, Mich., company took over the top spot from GM by selling 142,006 vehicles last month, or about 300 more than GM, according to Autodata Corp.

Ford’s sales report underscored how a lineup of new products and the meltdown at Toyota helped to fuel the automaker’s turnaround. Ford last outsold GM -- then hurt by a strike -- in August 1998.


Sales of Ford’s Fusion sedan, for example, more than doubled to 16,459 cars from February 2009. Meanwhile, sales of the Camry, its main rival from Toyota, plunged nearly 20% to 16,552.

“We are off to a strong start in 2010, and we continue to gain traction,” said Ken Czubay, vice president of U.S. marketing, sales and service for Ford.

He said more than 50% of the reservations to purchase the Ford Fiesta, a small car that goes on sale later this year, came from customers who didn’t currently own a Ford vehicle.

“Ford did extremely well,” said Jessica Caldwell, an analyst with auto information company “It shows there is not just one or two vehicles carrying the entire brand.”


Year to date, Ford has captured 17.5% of the U.S. auto market, up more than 3 percentage points from the same period in 2009.

Hampered by a series of large recalls and federal investigations into safety defects, Toyota’s sales dropped almost 9% to 100,027 vehicles compared with February 2009.

Given the negative publicity that has hounded the company this year, Toyota group Vice President Bob Carter said he was “surprised that we sold as many cars as we did.” The decline was less than what many analysts had predicted.

Toyota issued about 10 million recall notices worldwide recently, mostly for floor mats that can entrap the gas pedal and for a gas pedal that can stick. It has blamed both problems for causing unintended acceleration.

“Clearly we have some work to do,” Carter said. “We stubbed our toe in regards to our image.”

To help revive sales, Toyota is launching what Carter described as an “unprecedented” combination of advertising as well as financing and lease incentives through April 5.

Toyota is offering no-interest financing for 60 months on its most popular 2010 model-year vehicles, including the Camry and Corolla sedans subject to the recalls.

The automaker also plans a “loyalty” incentive to persuade Toyota customers to stick with the company. Owners of Toyota, Lexus and Scion vehicles will receive two years of free maintenance when they purchase a new vehicle. Toyota also will offer all shoppers cash rebates of $500 to $3,000 and special lease deals, depending on the vehicle and the sales region.


Analysts said the program could hurt the industry’s drive to regain profits after a disastrous 2009.

“These expensive programs should represent a material step up in cost of incentives, leading us to anticipate a breakdown in the industry’s recent pricing discipline,” said Brian Johnson, a Barclays Capital analyst.

He said the financing package would cost about $4,657 over the life of the loan for an average car at current auto-loan interest rates. This compares with current estimated average incentives of around $3,000 for GM, $2,700 for Ford and $1,600 for Toyota, he said. Automakers have been working to reduce the size of the incentives and discounts used to induce sales.

Most other manufacturers haven’t announced incentive offers for March, Johnson said, “but the choice is between following through or risk losing some market share. . . . In particular, the impressive turnaround in profitability of Ford North American operations benefited largely from materially improved pricing, which could be in jeopardy if the overall industry pricing discipline collapses.”

Ford, GM and Honda as well as import brands BMW, Audi and Subaru had February sales gains, mainly because sales were so depressed last year when automakers felt the effects of the recession and growing unemployment.

The industry is expected to sell about 11.5 million vehicles this year. Although that’s up about 10% from 2009, it is still well below the 16 million to 17 million a year of much of the last decade.

Total industry sales reached 780,265 in February, up 13% from the recession-plagued 688,945 of a year earlier. Year to date, sales are up about 10%, Autodata reported.

Factors such as “limited availability [of] credit, fuel prices that keep teasing the $3 line and households that continue to work on reducing overall debt” were still keeping auto sales at a comparatively slow pace, said James Bell, an analyst at auto information company Kelley Blue Book.


GM officials said the industry’s sales would have been about 5% higher if it were not for the bad weather last month.

“Bad snow and more bad snow,” said Mike DiGiovanni, GM’s chief sales analyst. “We have a lot of our sales in the north-central region, and we got hammered there. We think the retail will come along as we move into spring and better weather.”

GM’s sales rose 12% for the month to 141,535, and its performance was even better after factoring out the Pontiac, Hummer, Saturn and Saab brands it closed or shed as part of the automaker’s bankruptcy reorganization last year.

GM reported U.S. sales of 138,849, up 32% compared with February 2009. These results were driven by the strong sales of crossovers and passenger cars.

Despite its gains, GM reconfigured its sales and marketing team Tuesday. Sales and marketing will become separate departments for GM and all its brands, though the two were combined only in December. Mark Reuss, who became president of GM’s North American operations in December, said he would become more involved in the sales operations.

“I want us to get the most market share and profit we can out of this organization,” Reuss said. “I don’t think we’ve worked far enough or fast enough.”

American Honda Motor Co. saw its sales rise almost 13% to 80,671 in February from a year earlier.

“A year ago, the economy and our industry were at a low point marked with great uncertainty,” said John Mendel, executive vice president of sales for American Honda. “While we remain cautious, we’re happy to see customers actively seeking Honda products.”

Sales at Nissan North America jumped 29% to 70,189 from a year earlier. And Chrysler Group, which also underwent bankruptcy reorganization last year, saw sales rise by less than 1%, or just 399 vehicles, to 84,449 compared with February 2009.

Times staff writer Tiffany Hsu contributed to this report.