Tags: Auto | Sales | Gasoline | cars

Auto Sales Jump Despite Gasoline Price Spike

Thursday, 01 Mar 2012 11:15 AM

A surprising sales gain by General Motors Co. and strong performances by Ford Motor Co. and others helped push U.S. February auto sales to their highest annual sales rate in nearly four years as consumer confidence improved and drivers gave in to the need to replace their aging cars and trucks.

The sales gains came even as fuel prices shot up last month, spurring consumers seek out smaller, more environmentally friendly cars. Sales of Ford's Focus small car more than doubled in February.

The annual sales rate, a closely watched industry yardstick, was on track to reach 14.7 million vehicles, JP Morgan analysts said. That would be the best monthly showing since March 2008, before the financial crisis that sent Detroit into a tailspin.

GM said the rate could be as high as 14.9 million vehicles, topping the high end of analyst estimates.

GM's U.S. sales chief, Don Johnson, told analysts on a conference call that this could be the best monthly seasonally adjusted annual rate since 2008.

"There are a number of factors that are helping release this pent-up demand. They include stronger employment, good credit availability, and both of those are leading to improving consumer sentiment. And the unemployment rate is the lowest it has been in three years."

Short-term fluctuations in fuel prices will not hurt demand for new vehicles this year, but they could shift preferences for what American consumers will buy, Johnson said.

Added Reid Bigland, head of U.S. sales for Chrysler Group LLC: "A few years ago, higher fuel prices were a major threat to our total vehicle sales whereas today, those higher prices have become far less of an issue."

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's SURPRISE RISE

GM sales rose 1.1 percent to 209,306 vehicles last month. 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, up 14 percent from last year's levels. Chrysler, the U.S. automaker majority-owned by Fiat SpA, sold 133,521 cars and trucks last month, up 40 percent from last February's levels.

Volkswagen AG sold 30,577 vehicles, up 42.5 percent. New vehicle sales at Nissan Motor Co were up 15 percent at 106,731 last month.

GM predicted the annual sales pace in February would be between 14.5 million and 14.9 million vehicles.

Chrysler projected 14.9 million units, while Ford said it would be as high as 15 million units. Both Chrysler and Ford include medium and heavy trucks in their forecasts, which add up to 300,000 vehicles to the total.

On average, 38 analysts surveyed by Thomson Reuters expected February sales to hit an annualized pace of 14 million vehicles with the high estimate at 14.4 million. That would be up from 13.3 million a year earlier.

In February, average U.S. gasoline prices rose 30 cents per gallon to $3.73 for regular grade, which is extremely high for a winter month, according to the AAA motor club.

GM shares were up 2.3 percent at $26.62 at midday on Thursday, while Ford shares were up 2.5 percent at $12.69.

© 2017 Thomson/Reuters. All rights reserved.

   
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Thursday, 01 Mar 2012 11:15 AM
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