UPDATED: 4:30 P.M.
New car sales grew at a better than expected pace, continuing automakers' steady revival that began in 2011 and the early months of 2012 and forcing many analysts to revise upwardly year-long sales forecasts above a benchmark 14 million level.
This is a month that exceeded all expectations, said Jesse Toprak, the vice president of industry insights and trends at TrueCar.com.
Chrysler Group LLC was the big mover, posting a 40 percent year-over-year increase from last February. It's the best-selling February for the U.S. automaker since 2008, and it marked the 23rd consecutive month of year-over-year sales gains in a prolonged comeback for the company since its U.S. government-backed bankruptcy restructuring.
Our product portfolio now contains some of the most fuel-efficient vehicles in our company's history, driving our sales up 40 percent in February, said Reid Bigland, president and CEO of Dodge, a Chrysler brand. 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.
The other two U.S. automakers, Ford Motor Co. and General Motors Co., also posted gains. Ford sales climbed 14 percent, while GM shocked most analysts by posting a gain at all. GM, the other U.S. automaker given loans by the U.S. government in 2008 and 2009 along with Chrysler, saw sales jump 1.1 percent compared with the year-ago period.
Most forecasts had predicted GM's sales to fall about 6 percent year-over-year, because the company used a heavy incentives push early in 2011 to drive sales. And according to TrueCar.com, GM's incentives were expected to decline nearly 20 percent in February.
GM's number was the most surprising for us, Toprak said. It does show that the consumer demand for GM vehicles is strong and healthy. They're selling cars without spending as much in incentives.
The Chevrolet brand was the main contributor to GM's surprise, jumping almost 6 percent to more than 150,000 new car sales in February. Chevrolet passenger car sales were up 14 percent, while the company's small and compact car sectors -- including the Sonic, Cruze, Volt and Buick Verano -- jumped 43 percent.
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, GM's vice president of 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.
And Ford's U.S. sales increased 14 percent in the year-over-year period, which marked the company's best February sales month since 2000. For the year to date, Ford sales are up 11.2 percent.
Ford sales were driven by the record-setting performance of the Escape, which booked its strongest February ever. Ford Focus sales more than doubled to more than 23,000 units in the month.
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's vice president of U.S. marketing. Customers are recognizing Ford for investing in new cars, utilities and trucks with strong fuel economy, especially Focus, Escape and EcoBoost-powered vehicles.
Nissan Motor Co. North America sales also hit a new February record, climbing 15.5 percent. The Nissan brand rose 17.1 percent. Toyota Motor Corp. sales grew 7.9 percent on strong sales of the Camry and Prius brands. Honda Motor Co. is expected to report U.S. sales results later Thursday.
Two forecasts from TrueCar and Edmunds.com expected automakers to sell nearly 1.1 million new cars in February, the strongest growth for the industry since 2008 and a 6 percent increase from last February. After an original consensus of 13.8 million vehicle sales in 2012, February ended at a seasonally adjusted rate of 15.1 million, the highest since March 2008. Most analysts now expect sales of upwards of 14 million.
Analysts said several factors contributed to a strong February: surprisingly strong President's Day weekend sales, increasingly upbeat economic conditions and a mild U.S. winter. Edmunds.com said consumers' pent-up demand is also driving sales. The site said the average age of trade-in vehicles in the first two months of the year, 6.1 and 6.2 years, is the oldest on record besides the period during the U.S. government's Cash for Clunkers program in 2009.
Analysts also said they didn't expect rising gas prices in the early months of 2012 to have much of an effect on the top line of new car sales as the year moves forward. If anything, the rising prices will only sway buyers toward more fuel-efficient and hybrid vehicles.
There's a rising tide of excellent buying conditions right now that is really driving auto sales momentum, said Jessica Caldwell, a senior analyst at Edmunds.com. Things seem to be breaking the right way for both car buyers and dealers.