Despite an economy stuck in neutral, the auto industry is rolling along as it experiences one of its most stable growth periods in years.
Most automakers again posted strong monthly sales gains, continuing a trend that isn’t likely to abate any time soon as consumers take advantage of low-interest financing and look to replace aging vehicles.
The steady flow of buyers to U.S. showrooms is enabling carmakers to better plan production schedules, avoid price wars and improve profits. The industry sold almost 1.2 million vehicles in September, a 13% gain from the same month a year earlier.
“There’s a feeling among dealers and automakers that car sales are easing into cruise control, and that’s a good feeling for an industry that’s felt more than its share of bumps in the last few years,” said Edmunds.com analyst Jessica Caldwell.
The auto business took a tremendous hit during the recession, undergoing a massive restructuring and seeing a decline in demand for new vehicles.
The industry’s turnaround is likely to play a role in November’s election and be a key topic of the first presidential debate Wednesday, which will focus on the economy.
The numbers make for “a good story to tell,” especially for the Democrats and President Obama, who pushed the $85-billion bailout of the industry, said Thilo Koslowski, an automotive analyst at research firm Gartner Inc. Republican presidential nominee Mitt Romney said that he would not have supported the automotive industry bailout.
Koslowski, however, cautioned that the U.S. economy remains fragile and “it might be too early to pop the cork.”
“A lot of the sales increase comes from pent-up demand that was the result of the huge downturn during the recession,” Koslowski said. “If the next eight months continue to show this upward trend then we will be in really good shape and automakers will be able — at least to some extent — to make up losses from declining global markets.”
That’s what the industry is looking for.
“Every year we end up with over 2 million more people who are driving” because of population growth, said Ellen Hughes-Cromwick, Ford Motor Co.'s chief economist. That builds a floor for the industry, creating “some basic physics underneath the economy” that will contribute to consistent growth in auto sales, Hughes-Cromwick said.
Other automakers are bullish, too.
“With our current product lineup, record-low interest rates and a stable U.S. economy, we remain optimistic about the health of the U.S. new vehicle sales industry and our position in it,” said Reid Bigland, Chrysler’s U.S. sales chief.
General Motors Co. sales vice president Kurt McNeil said he is encouraged by positive economic signs from the housing sector — which is expected to help truck sales — lower jobless claims, higher consumer sentiment and higher consumer spending.
“The steepest head winds are uncertainty. Some of which is related to the sovereign debt crisis in Europe and concerns about the pace of growth here at home,” McNeil said. “Still, we believe all of the factors are net positive. In others words, autos will continue to be a bright spot for the U.S. economy.”
The industry is on track to sell about 14.4 million autos this year, which would be about a 12% gain from 2011 and a 38% jump from a recession-induced low of 10.4 million vehicles in 2009.
With the exception of Nissan, the major foreign nameplates had strong, double-digit sales gains in September, with Toyota and Honda rebounding from depleted inventory and sales levels caused by the earthquake in Japan last year.
Toyota reported monthly U.S. sales of 171,910 vehicles, up 41.5% from a year earlier. Honda sales jumped 30.9% to 117,211 vehicles. Subaru had September sales of 27,683, a 32.2% increase.
Nissan, however, reported sales of 91,907 vehicles, down 1.1% from the same month a year earlier.
The South Korean brands also did well. Hyundai Motor America said its U.S. sales increased 15.3% in September to 60,025 vehicles. Kia Motors America said its U.S. sales jumped 35.1% in September to 48,105 vehicles.
Meanwhile, General Motors said its sales rose 1.5% to 210,245 vehicles, its highest September U.S. sales since 2008. Ford’s sales stalled. The carmaker sold 174,454 vehicles in September, down by 406 vehicles from the same period a year earlier, according to Autodata Corp.
Of the American brands, Chrysler Group had the best month, selling 142,041 vehicles in the U.S., a 11.5% improvement from the same month a year earlier and its best September since 2007.