News Column

Automakers Post Gains

Feb 28 2013 10:00PM

Nathan Bomey, Brent Snavely and Alisa Priddle

auto sales

An improving housing market and a lack of serious concern over Washington's latest fiscal fight drove sales increases in February for the major automakers.

General Motors' sales rose 7 percent from a year earlier, while Ford reported a 9 percent increase. Chrysler's February sales edged up 4 percent after speculation that the company's U.S. sales might break a streak of 34 straight months of sales increases.

Toyota sales rose 4.3 percent, Nissan sales fell 7 percent and Volkswagen rose 3 percent.

Despite gasoline prices nearing $4, full-size pickup trucks flourished last month as rising housing prices prompted more small businesses to buy vehicles.

Sales of Ford's F-Series, the most popular vehicle in the country, rose 15 percent to 54,489 units. GM's Chevrolet Silverado pickup truck rose 29 percent to 41,643 units, and the GMC Sierra rose 25 percent to 14,133 as GM sells 2013 models to make way for its redesigned 2014 pickups in the second quarter. Chrysler's Ram truck edged up 3 percent to 23,289.

"The recovery in home prices is building customer confidence, credit is available and affordable and consumers appear to be taking higher payroll taxes in stride, at least when it comes to replacing older vehicles," said Kurt McNeil, GM's vice president for U.S. sales operations, in a conference call.

The full-size pickup segment in February accounted for 12.3 percentof the industry, up from 12.1 percent in January and a huge increase from 10.7 percent a year ago, said Erich Merkle, Ford's U.S. sales analyst.

Ken Czubay, Ford vice president for U.S. sales, marketing and service, said he expects pickups will keep their larger share of the market, especially with improved housing and construction, which have an "incredible correlation" to truck sales.

The strong truck sales contrasted with pockets of weak sales for small and mid-size cars. Although Chevrolet sales rose 5 percent for the month, they would have fallen 1 percent without the Silverado's increase. The Chevy Malibu dropped 26 percent, Cruze fell 12 percent and Sonic slipped 24 percent.

At Nissan, the mid-size Altima fell 16 percent. Last year at this time Nissan was selling a higher volume of Altimas than normal as it cleared out inventory and prepared to launch a redesigned model.

Toyota reported a 9.5 percent decrease in sales for the mid-size Camry to 31,270, while sales of the Prius family of vehicles fell 13.5 percent to 17,812.

On the other hand, Chrysler sold 7,720 units of its new Dodge Dart compact, and Ford recorded a 28 percent increase for the Fusion sedan to 27,785 units.

Generally, high gas prices empower small vehicle sales. But GM's McNeil said the company believes gas prices will fall as temporary refinery troubles subside.

Economists are watching closely to see whether consumers halt spending because of automatic spending cuts triggered by Washington's sequestration crisis.

But Ford economist Jenny Lin said the effect of a 2 percent increase in payroll taxes and sequestration may be more than offset by other economic factors. Those include higher consumer confidence, low interest rates and plenty of available financing, strong housing starts and aging vehicles that people need to replace.

Chrysler and Fiat CEO Sergio Marchionne told reporters Thursday in Kokomo, Ind., that he's not worried about sequestration.

"I have the ultimate faith in the ability of the political system to resolve the issue," Marchionne said. "I understand that a lot of this is part of a ritual that needs to be concluded. For me to express a view beyond that ritual would be nonsensical."

Analysts are predicting that overall industry sales increased somewhere between 2.4 percent and 5.7 percent in February, buoyed by an increased demand for pickups and the strength of the U.S. economy.

Chrysler's results were boosted by the performance of its Dodge brand, which reported a 30 percent sales gain and sold 7,720 Dart compact cars -- the most since it was launched last summer. However, Jeep brand sales fell 16 percent, Chrysler brand sales fell 7 percent. Sales for both the Ram and Fiat brands increased 2 percent.

Ford's luxury Lincoln brand, which the company is trying to revive, continues to struggle, with sales down 29 percent. The new MKZ is undergoing a slow ramp-up with full inventories to dealers still a month away.

To sustain momentum, the automaker announced it will increase overall vehicle production in the second quarter by 800,000 vehicles or 9 percent more than a year ago.

All four of GM's brands achieved sales increases for the month, with Chevrolet up 5 percent, Cadillac up 20 percent, Buick up 15 percent and GMC up 10 percent.

But sales of GM's passenger cars fell 4 percent as the company struggles with what executives have described as the oldest vehicle portfolio in the industry.

Still, GM's freshest products came on strong. The company sold 3,382 units of the Cadillac ATS in the month after the vehicle's victory in the North American Car of the Year competition, outpacing the Cadillac CTS at 2,566 units. GM plans to unveil a redesigned version of the CTS later this month.

"All signs of the industry's health are positive right now," John Humphrey, senior vice president of the global automotive practice at J.D. Power and Associates said in a recent report. "Average transaction prices are up, incentives are stable, leasing is at a healthy level and newly redesigned models continue to make an impact on the marketplace."



Source: (c)2013 the Detroit Free Press. Distributed by MCT Information Services.


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