News Column

Sales of New Cars Zoom Despite High Gas Prices

April 4, 2012

Tyrel Linkhorn

Car with luxury sign on windshield

All three Detroit automakers reported their best March sales numbers in years, and some foreign makers logged their best months ever as the new-car market continues to surge in spite of pricey petrol.

Chrysler Group LLC again led the way with a 34 percent gain over last year and posted its best first quarter since 2008. The automaker saw double-digit gains across all four core brands, including a 70 percent spike for the Chrysler nameplate and a 36 percent jump for Jeep. The automaker now has posted year-over-year sales gains for 24 consecutive months.

General Motors Corp. said it boosted March sales 12 percent over last year, and Ford Motor Co. reported a 5 percent gain.

On an annualized selling rate, analysts said the first quarter projected to 14.5 million vehicles, beating most estimates coming into the year.

"This is by far the best quarter we've had since the recession hit," said Brandon Mason, a senior analyst with PwC Autofacts Group in Detroit.

PwC Autofacts was forecasting new car sales of 14 million in 2012, a number that might have to be adjusted upward if the trend continues.

Analysts say a combination of factors have helped keep new car sales brisk. Among them: increased consumer confidence, dropping unemployment rates, easier access to credit, and pent-up demand that comes from what is the oldest fleet of automobiles ever on America's roads.

Dealers also are reaping the benefits. Doug Kearns, general manager at Yark Automotive Group, said the group posted a 19 percent gain from March, 2011, and had its highest monthly volume ever.

"It's kind of one of those months where nothing bad happens," Mr. Kearns said. "Every one of the brands, and even used cars, did really well. That's how you get a record month."

Small and fuel-efficient vehicles gained market share and outpaced the industry, with GM saying it sold a record 100,000 vehicles that get an EPA-estimated highway rating of 30 miles per gallon or better. Ford said sales of the Focus jumped 64.7 percent from March, 2011, while Chrysler reported the best month yet for the compact Fiat 500.

Still, analysts and dealers say high gas prices aren't having the industry-shaking effect they previously have had.

"I think we all remember the last time we saw gas prices shoot up. Pickups tanked, the demand for small cars spiked, and we didn't know what to do," Mr. Mason said. "The second time around we hit $4 a gallon, the shock factor kind of backed off. With all the bad news consumers have had to go through in the last 18 months, it's not a big deal."

Consumer surveys back that up.

CNW Marketing Research in Bandon, Ore., has for years tracked car buyers' reaction to gas prices. In February, it found the point that gas would have to reach before a majority of people would alter driving or buying habits was $4.50 a gallon. A year ago, that price point was $4 a gallon, the firm said.

Though neither of the Toledo-made Jeep products would be called a fuel sipper, both posted healthy gains over last year.

Wrangler sales were up 43 percent to 12,557, and Liberty sales rose 46 percent to 7,605.

Though the brand can't ignore the price at the pump, analysts say Jeep doesn't have to worry at the same level as other automakers when prices do spike.

"It's a different kind of brand. You can't necessarily apply the same economics or the same buyer patterns you would to a conventional brand," said Bernard Swiecki, senior project manager at the Center for Automotive Research in Ann Arbor.

And Jeep does have a more fuel-efficient lineup than it had in the past. The Wrangler picked up a few extra miles per gallon for the 2012 model year with the addition of the Pentastar V-6 engine, and the next-generation Liberty is expected to be vastly more fuel-efficient than the current model.

Among foreign makers, Volkswagen AG had the strongest gain, increasing March sales by 30 percent from last year. Hyundai Motor America reported a 20 percent increase, with both its Hyundai and Kia brands reaching all-time monthly sales records. Nissan, up 13 percent, also reported a single month sales record. Toyota Motor Co. had a 15 percent gain.

Honda Motor Co. was the only top brand to falter from last year, with March sales coming in 5 percent lower. The Japanese automaker attributed the decline to an "exceptionally strong" month in March, 2011.

From a volume standpoint, GM held the top spot at 231,052. Ford was second at 223,418, followed by Toyota (203,282), Chrysler (163,381), and Nissan (136,317).

The top selling model for March was -- as it has been consistently -- the Ford F-Series pickup.

Source: (c) 2012 The Blade (Toledo, Ohio)

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