Incentives Seen Boosting March U.S. Auto Sales

Tuesday, 30 Mar 2010 11:27 AM


Automakers are expected to post a sharp jump in March U.S. auto sales, supported by hefty incentives from Toyota Motor as it looked to repair an image tarnished by vehicle recalls, analysts said.

Ford Motor and General Motors also are expected to be among the leaders in U.S. auto sales for March with the industry expected to report an overall increase of about 25 percent from a year earlier.

Toyota introduced high incentives early in March as it sought to jump-start sales after the safety recalls and sales halts a month earlier. Competitors quickly matched those incentives.

All of the top six selling automakers are expected to post sales increases in March from a year earlier except for Chrysler. Automakers report March U.S. sales on Thursday.

Most forecasters late in March expected U.S. auto sales of 12 million to 12.5 million vehicles in the seasonally adjusted annualized rate (SAAR) economists use, up from an anemic 9.7 million in March 2009.

"I think we could probably surpass a 13 million SAAR for the month," Autoconomy.com analyst Erich Merkle said.

Merkle said March sales could be supported by Toyota's incentives, plus pent-up demand from the U.S. recession and snowy weather in the Northeast during February that had hampered sales across the industry.

Toyota posted a 16 percent sales drop in January from the year-earlier month and a  9 percent drop in February, pressured by production halts, stop-sale orders of some of its best-selling models, congressional hearings and negative news reports regarding the automaker's quality and safety.

The March rise is seen as fitting a widely expected arc of a slow recovery for the U.S. automobile sector, which forecasters have said will be healthier in the second half of 2010.

Ford is expected to remain the top seller in the U.S. market, a distinction it snared in February for the first time since 1998, according to Edmunds.com.

Ford's sales are expected to rise 40 percent year-on-year, Toyota sales 33 percent and GM sales by 31 percent, IHS Global Insight analyst Chris Hopson said.

"What a difference a month makes for Toyota, whose sales climbed 80 percent since February thanks to generous incentives and more balanced headlines," said Jessica Caldwell of Edmunds.com.

Edmunds expects GM's U.S. sales to rise in March, but its retail market share to fall to 17.6 percent from 18.2 percent in March 2009.

How long Toyota's incentives continue will help shape this year's industry sales, which will be affected by a "pricing battle," Barclays Capital analyst Brian Johnson said.

"Toyota might back away from incentives next month to test the market, but if it perceives lasting damage to its brand, we believe the automaker could be back with more offers, since it has signaled recently that it will do whatever is required to achieve a 16.7 percent market share for the year in line with its 2008 performance," Johnson said.

In 2009, Toyota's share of the U.S. market for light vehicles was 16.7 percent, second only to General Motors' 22.2 percent.

© 2015 Thomson/Reuters. All rights reserved.

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