U.S. Feb auto sales rise to highest level in 4 years

DETROIT Fri Mar 2, 2012 5:19am IST

Related Topics

Stocks

   

DETROIT (Reuters) - U.S. auto sales rose nearly 16 percent in February and the annual sales rate leapt to its best level in four years, helped by a surprising sales gain by General Motors Co (GM.N) and strong results from Chrysler Group LLC and Ford Motor Co (F.N).

For a second month in a row, sales surpassed even the most optimistic expectations. Analysts ascribed the gains partly to rising consumer confidence and upbeat U.S. economic data.

"That in itself is probably a big green-light indicator for consumers," said TrueCar.com analyst Jesse Toprak. "It's telling them it's OK to buy a car. You'll be fine."

The annual sales rate, a closely watched industry yardstick, jumped to 15.1 million vehicles, according to Autodata, the best monthly showing since February 2008, before the financial crisis that sent Detroit into a tailspin.

Analysts had expected an annual pace of 14 million vehicles, with the high estimate at 14.4 million.

Vehicle sales rose 15.7 percent to more than 1.1 million.

The gains came even as fuel prices shot up 30 cents a gallon last month, which spurred compact car sales. Sales of Ford's Focus small car more than doubled in February.

Toprak said the wider availability of financing last month helped some consumers offset the rising cost of fuel. American drivers also sought to replace their aging vehicles, which contributed to the better-than-expected sales performance.

"There are a number of factors that are helping release this pent-up demand," GM's U.S. sales chief, Don Johnson, told analysts on a conference call. "Perhaps the most encouraging sign is that home builders are becoming more optimistic."

Some analysts and industry executives have said that the U.S. auto sector will not recover significantly until U.S. home prices pick up and consumers feel more prosperous.

The auto industry is now in its third year of a fitful recovery from a severe slump that led to the bankruptcies of GM and Chrysler in 2009. The U.S. industry was selling nearly 17 million vehicles a year on average in the 10-year period ending in 2007.

Last year, the industry sold 12.8 million vehicles.

NO 'MASS DEFECTION' FROM TRUCKS

Short-term fluctuations in fuel prices will not hurt demand for new vehicles this year, but they could influence consumer preferences on what types of cars to buy, analysts said.

Analysts are watching gasoline prices, which early last year contributed to a softening in the economy that nearly pushed it back into recession.

Chrysler posted a February U.S. sales increase of 40 percent compared with the year-ago period. Ford saw a 14 percent rise, Volkswagen AG (VOWG_p.DE) was up 42.5 percent, Kia Motors Corp (000270.KS) gained 37.3 percent and Nissan Motor Co Ltd (7201.T) was up 15.5 percent.

But sales of trucks and sport-utility vehicles were better than expected in February, analysts and executives said.

This is in stark contrast to spending habits in 2008 when average gasoline prices first topped $4 a gallon, spurring a "mass defection" from trucks to smaller cars, said Al Castignetti, head of the Nissan brand in North America.

"Every time it happens, up until this point, we've seen the exodus," he said. "Is the American public being conditioned to accept higher gas prices?"

Auto sales are watched as one of the earliest indicators of U.S. consumer demand and the willingness of Americans to finance big-ticket purchases.

U.S. auto sales have benefited in recent months from consumers' need to replace aging vehicles, which many delayed during the depths of the economic downturn. The average vehicle on the road is a record 10.8 years old.

GM sold 209,306 vehicles last month, up 1.1 percent from the previous February. Analysts had predicted a decline in GM sales as the No. 1 U.S. automaker offered fewer incentives compared with a year earlier.

Ford sold 179,119 cars and trucks in February, while Toyota Motor Corp (7203.T) sales rose 12.4 percent to 159,423 vehicles.

Chrysler, the U.S. automaker majority-owned by Fiat SpA (FIA.MI), sold 133,521 cars and trucks last month. Volkswagen sold 30,577 vehicles, and new vehicle sales at Nissan rose to 106,731 last month.

GM shares gained 1.7 percent to close at $26.47 on Thursday, while Ford shares were up 2.3 percent to $12.66.

(Reporting By Deepa Seetharaman and Ben Klayman; Editing by Maureen Bavdek, Mark Porter and Matthew Lewis)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Economic Pulse

REUTERS SHOWCASE

Political Pulse

Political Pulse

100 days of Modi: Good for business, not so good for marginalised groups.  Full Article 

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Best Economy

Best Economy

Swiss economy most competitive once again; EU, U.S., Japan improve.  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage