Can strong auto sales pace continue as year progresses?
With most of the major automakers having reported their U.S. sales for February it looks like the industry posted its best annualized sales rate in four years.
Most estimates place the sales rate north of 14.5 million vehicles and possibly up to 15 million vehicles. Automakers and analysts credit an improving economy, easier consumer credit and people replacing aged vehicles after delaying purchases through the recent recession.
But some are asking if the robust pace of the last month will continue.
“We need to see if the trends are there,” said Don Johnson, General Motors sales chief. “ I don’t want to sound pessimistic because we are really happy with January and February.”
Certainly the economy appears stronger than GM expected, helping the automaker squeeze out a 1% sales increase over a strong February a year ago, Johnson said.
But there are other factors that combined for the strong month.
Mild winter weather in the Midwest and Eastern Seaboard allowed for more car shopping. Japanese brands had a better supply of vehicles after recovering from production disruptions caused by the Japanese earthquake and flooding in Thailand last year. Additionally, some manufacturers started to deliver vehicles in greater numbers to the rental car companies to fulfill sales commitments made late last year.
Heavy sales to fleet customers might have pushed the sales rate higher than most analysts expected, said Jessica Caldwell of auto information company Edmunds.com.
And then there is the question of whether higher gas prices will spook consumers. Already the rapid rise in fuel expenses has changed the mix of cars being sold. About 24% of the vehicles sold last month were small cars, according to Erich Merkle, the sales analyst at Ford Motor Co. That compares to less than 20% just two months ago, he said.
Still there was no doubt that overall sales were good in February.
Chrysler said its U.S. sales rose 40% compared with the same month a year earlier, to 133,521 vehicles.
Volkswagen of America said sales of its VW brand jumped almost 43% to 30,577 vehicles, its best February since 1973.
Kia Motors America said its sales gained 37% to 45,038 vehicles.
Hyundai Motor America said its sales rose almost 18% to 51,151 vehicles.
Nissan North America said its U.S. sales grew almost 16% to 106,731 vehicles.
Ford said its sales increased 14% to 179,119 vehicles.
Toyota Motor Corp. said its sales grew just over 12% to 159,423 vehicles.
American Honda Motor Co. sales rose 12% to 110,157 vehicles.
GM said its sales increased 1% to 209,306 vehicles.
Jesse Toprak, the analyst at auto price information company TrueCar.com, said he thinks sales will continue to grow.
“The selection of new vehicles at the U.S. dealerships is the best consumers have ever had. Add cheap loans, attractive leases, high trade-in values, and relative improvements in lending -- we have the perfect recipe of another year of healthy growth for car sales in 2012,” Toprak said.
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