GM, Chrysler lead as U.S. auto sales rise

By @ibtimes on

U.S. auto sales jumped by about 18 percent in January, led by gains for General Motors Co and Chrysler as the two Detroit automakers restructured by the U.S. government took share from rivals.

The stronger U.S. auto sales results pointed to a recovery in American consumer demand and a return of easier lending terms by banks, auto executives and analysts said, despite the threat of higher oil prices ahead.

Meanwhile, major automakers reported a strong start to 2011 outside the United States, soothing concerns about slower demand in growth-engine markets like India and a bumpy recovery in the developed markets of Europe.

The major risk, analysts said, remains the prospect that higher oil prices could crimp demand or send consumers scrambling toward the kinds of small vehicles that are typically less profitable for automakers.

We're still not at the oil prices that would tilt the industry, said Nationwide chief economist Paul Ballew. If oil prices don't trip us up, Detroit should have a pretty good year.

GM posted a 22 percent sales gain, pushing its market share above 20 percent.

It was the first time the top U.S. automaker had taken market share in six months and came along with a jump in sales of pickup trucks and SUVs, the heavy vehicles that remain GM's bread and butter.

GM's sales gain came as it stepped up spending on incentives to lure consumers, although the automaker vowed that it would not return to its much-criticized practice of buying market share with zero-percent financing and other discounts that undercut the resale value of its cars.

We're not going to return to the days of driving production with incentives. We know that's not going to be a recipe for success for us, GM's sales chief, Don Johnson, told reporters and analysts.

Chrysler, which is pushing toward an initial public offering of stock in the second half of 2011, had a 23 percent sales gain.

Other major automakers trailed with double-digit sales gains: Toyota Motor Co gained 17 percent; Honda Motor Co and Nissan Motor Co were up 15 percent; Ford Motor Co gained 13 percent.

GM shares were up 0.6 percent and Ford shares were up 1.1 percent on Tuesday afternoon.

BAD WEATHER AND BIG TRUCKS

Winter storms pummeled much of the United States in January, snarling showroom traffic in parts of the country that are normally outside the Snowbelt.

That included a particularly strong winter storm in the middle of January that caused six states to declare states of emergency, shut interstate highways around Atlanta and dropped heavy snow in parts of Texas and the Carolinas.

Nissan's U.S. sales chief, Al Castignetti, said the harsh weather had caused consumers to defer purchases, especially in the Northeast, typically a strong area of sales for Nissan.

But Castignetti said he saw no sign of an interruption in the slow but steady recovery in consumer demand aided by easier credit terms from banks and finance companies.

Despite the creep higher in gasoline prices, consumers continue to shop for trucks and larger vehicles, he said.

We really haven't seen a hiccup yet from oil prices, Castignetti said. It could start to creep in but we haven't seen it yet.

Both Ford and GM, the two leading pickup truck makers, both reported sales for those work-related vehicles that outstripped gains for the market as a whole.

Pickup trucks are often used by small business owners and analysts track that category of demand as a leading indicator for business investment.

Sales for Ford's F-Series trucks jumped 30 percent. Sales for GM's Chevy Silverado and GMC Sierra rose by a combined 29 percent.

OTHER MARKETS MIXED

French passenger car sales data showed a rise of 8 percent as the last effects of France's scrapping scheme boosted the figures.

Spain, where incentives ran out in July, and a weak economic outlook and high unemployment are hurting spending power, was another dark spot, with sales down 24 percent.

In Belgium, sales rose 7.8 percent. Italian auto orders, estimated at about 159,000, were about 27 percent higher than the same month a year earlier.

Meanwhile, Indian automakers reported sales rises of between 14 and 22 percent.

Auto sales in India grew a record 31 percent in 2010, driven by a burgeoning middle class, but a hike in interest rates, and rising fuel and vehicle costs are expected to slow sales growth this year.

Sales in Japan, excluding the smallest class of vehicles, fell 21.5 percent in January, declining for the fifth straight month after subsidies to replace older cars expired.

(Additional reporting by Gilles Guillaume in Paris, Hyunjoo Jin in Seoul and Sumeet Chatterjee in Mumbai; writing by Kevin Krolicki; Editing by Vinu Pilakkott, Andrew Callus and Matthew Lewis)

Join the Discussion