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Thursday, March 1, 2012

Car Sales Reach Pre-Recession Levels

U.S. Car Sales Reach Pre-Crash Levels

Still a long way to go to match prior peaks.

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U.S. car sales surged to their highest level in four years — reaching numbers not seen since the start of the industry's worst downturn since the Great Depression.  Notably, there were no real losers during a month where analysts had anticipated a few manufacturers — notably GM — to turn in less than stellar performances.

A number of makers, in fact, posted records for the month, while Volkswagen reported its best sales in almost 40 years. Significantly, automakers saw average transaction prices, or ATPs — what consumers actually spend on a vehicle after incentives — surge by 7% while those givebacks fell 4% for the month, according to tracking service

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The strong showing, in a month when manufacturers collectively sold about 1.1 million new cars, light trucks and crossovers, suggests that recent studies are on target indicating a significant upturn in long-lagging consumer confidence.

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

The new Chevy Sonic outsold both the Toyota Yaris andHonda Fit combined.

Among the big winners were Volkswagen and Chrysler, both gaining 40%, year-over-year, in February, the German maker recording sales levels it hadn't seen since the final days of the original Beetle.  Chrysler, meanwhile,posted its best February sales since 2008 and the 23rd-consecutive month of year-over-year sales gains. And one key model, the big 300 sedan, saw demand increase nearly fivefold.

Overall, the Seasonally-Adjusted Annual Sales Rate hit 15.1 million for February, and for the first two months of 2012 has pushed for beyond the 13.8-million figure most analysts had projected for 2012.  That's still a long way from matching the 16 million and 17 million peaks set during the previous industry boom, however. And more cautious analysts continue to warn that the upturn may not be sustainable, especially if fuel prices surge to new record highs, choking off the overall economy's recovery.

Some makers were happy just to be back in positive territory, notably lead Japanese maker Toyota — which scored a 12.4% increase for the month, which worked out to 7.9% on a daily basis when accounting for the fact that Leap Year meant one extra selling day versus February 2011.

Japanese — and Korean — carmakers could celebrate the fact that February saw a surge in small car sales, underscoring public concern about fuel prices.  Those vehicles accounted for 23% of the market last month, up from 17.9% in December 2011, according to tracking service Edmunds.  Japanese makers have traditionally dominated the small and midsize passenger car segments but something is shifting in the market.

Ford saw demand for its compact Focus more than double for the month, to 23,350. It was the long-running nameplates best month, in fact, in 12 years.  Meanwhile, General Motors new Chevrolet Sonic rang up 8,000 sales — more than the long-popular Toyota Yaris and Honda Fit combined.

Overall, General Motors reported a slight sales increase – defying some forecasts predicting a February decline — and noted the underlying strength of the US economy is steadily improving. GM reported total sales of 209,306 vehicles in February, up 1.1% compared with the company's very strong February 2011 results.

"Chevrolet's 6 percent sales increase, which was driven by new models, as well as a stronger economy, helped GM exceed last February's remarkably strong result," said Don Johnson, vice president, U.S. Sales Operations. "It's an affirmation of our progress. We are continuing to execute the same disciplined sales strategy that was the key to our success in 2011."

While GM sales have been lagging key competitors in recent months, the maker has garnered kudos for its willingness to take a sales hit in return for reining in costly incentives.  Nonetheless, preliminary estimates suggest the giant maker is still putting an industry-leading average of more than $3,000 on the hood of each vehicle it is selling in the U.S.

Industry wide, February light vehicle sales will top 1.1 million units, thanks to stronger employment and credit availability, an improving housing market and the recovery in consumer sentiment, noted GM's Johnson.

"Commercial sales are a good barometer for the economy," Johnson said. "GM's commercial deliveries increased 35 percent in February, driven by strong sales of heavy-duty pickups," he said.

The underlying strength of the economy was reinforced by Volkswagen AG, which posted a 42% increase in sales as it enjoyed the best February since 1973.  The maker is receiving a clear consumer endorsement for its strategy of developing products – such as the 2012 Passat – specifically for the American market.  It is building that midsize sedan at a new assembly plant in Chattanooga, Tennessee, the first time VW has built cars in the States in nearly three decades.

Ford posted a 14% increase in February U.S. sales versus year-ago levels, with 179,119 vehicles sold; retail sales increasing by 19% as the maker continued shifting away from its long-time dependence upon daily rentals and other low-profit fleets.

"Sales momentum built as February unfolded, with higher fuel prices driving consumer demand for more fuel-efficient vehicles in the second half of the month," said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service. "Customers are recognizing Ford for investing in new cars, utilities and trucks with strong fuel economy, especially Focus, Escape and EcoBoost-powered vehicles."

February was good news for all the domestic makers, lowering concerns that they might lose momentum after their 2011 upturn – all three of the Detroit Big Three gaining market share last year for the first time in more than a decade.

Chrysler has beaten the industry average sales increase in each of the last 12 months. It was Chrysler Group's ninth-consecutive month of sales gains of at least 20%, while In February, every Chrysler Group model in production for more than 12 months posted a year-over-year sales gain. The Chrysler brand led the way with a solid 114% increase.

And even the struggling Fiat brand got some good news, February wrapping up its first full year back in the U.S. market with its strongest monthly demand yet.

"Our product portfolio now contains some of the most fuel-efficient vehicles in our company's history driving our sales up 40% in February," said Reid Bigland, President and CEO – Dodge Brand and the head of Chrysler's U.S. Sales. "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. We now have 13 vehicles with an EPA-rated highway fuel economy of 25 miles per gallon or higher, and six of those vehicles get 31 mpg or higher."

Even some of the maker's bigger, less fuel-efficient models gained momentum, however, the flagship 300 sedan – was up a dazzling 480% in February, the full-size sedan's fourth-consecutive month with triple-digit gains.  The smaller 200 midsize sedan also showed a triple-digit increase for the month.

Joe Szczesny contributed to this report.

[Sent from Ralph Paglia's iPhone]

Ralph Paglia 

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