The U.S. auto industry is expected to report more than one million new cars sold in February, setting an unexpectedly robust pace that may result in the sector's strongest growth since 2008.
Automakers will report nearly 1.09 million new cars sold in February on Thursday, according to two industry forecasts, continuing the industry's revival. This is an increase of nearly 6 percent from February 2011 and 20 percent from January. That would equal a seasonally adjusted annual rate above 14 million units.
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. Caldwell added the February sales were even more encouraging than January.
As a result, analysts' original expectations for 2012 may be revised upward, as January and February are traditionally two of the worst-selling months of the year.
Analysts had previously forecast around 13.8 million sales this year, an increase of about one million units from 2011.
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 Web 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.
Leading the charge was another strong month from Chrysler Group LLC, which saw its second straight month of huge year-over-year gains. Chrysler will post above a 27 percent increase from February 2011 and a jump of more than 20 percent from January, according to forecasts from both TrueCar and Edmunds.com.
Chrysler has continued its momentum into the new year from 2011, when it posted its first annual net profit since 1997. This is partly due to Chrysler's slow start to 2011, making its percentage appear bloated. But Toprak said it also reflects the significant consumer satisfaction with Chrysler's product.
If you look at the lineup of Chrysler products today vs. just a year ago, there have been massive improvements, said Jesse Toprak, the vice president of industry trends and insights and TrueCar.com.They've seen some significant gains in retail markets. That clearly shows that the consumer's acceptance of Chrysler products has improved immensely.
Ford also is on track to post an impressive month, growing sales about 14 percent from February 2011 and a whopping 30-plus percent from January, according to the two forecasts.
Japan's Big Three automakers, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., will continue their climb back a difficult 2011. Both forecasts project strong year-over-year growth for February, which has not happened since Japanese production was interrupted by last spring's earthquake and tsunami.
GM, again, is the outlier. Toprak said that likely won't change until April, because the automaker used an incentives-heavy push to drive sales in the early months of 2011. Sales should be up 17.1 percent from January, according to Edmunds, even as GM continues to reduce incentive spending -- down 19.3 percent from February 2011 and 1.9 percent from January.
Jeffries analyst Peter Nesvold believes that auto sales will continue to rise this year along with the growth of the overall U.S. economy.
The economic underpinnings of what's happening right now are still very favorable, Nesvold said.