U.S. auto sales continued their bull run into March as American consumers eschewed high fuel prices and gravitated to trucks and SUVs as their confidence in the state of the economy has risen along with the rebounding housing market and modest jobs growth.
Industry watchers expect between a 6 percent and 8 percent rise in total U.S. new vehicle sales in March, the strongest performance in five years, due largely to robust demand for pickup trucks, sport utility and crossover utility vehicles. Ford Motor Company (NYSE:F) and Chrysler LLC, a subsidiary of Italian company Fiat SpA (Milan:F), reported the best monthly performance since 2007. (Click here for more details about Ford’s March sales performance. Click here for Chrysler’s breakdown.)
“The auto industry continues to recover at a faster pace than the broader economy, which has been the story for the past four years,” said Alec Gutierrez, senior market analyst for automotive valuation company Kelley Blue Book.
Kelley’s Seasonally Adjusted Annual Rate for March stands at 15.3 million unit sales, slightly higher than the 15.2 million estimates from auto industry researcher TrueCar.com and General Motors Company (NYSE:GM). The SAAR is a monthly gauge of how the industry is faring toward meeting full-year sales estimates. February’s SAAR was 15.4 million. March will be the fifth consecutive month where the SAAR hovered over 15 million, which hasn’t happened since the first half of 2008.
Automotive information provider Edmunds.com raised its full-year sales forecast to 15.5 million units, up from 15 million in its last adjustment in September. The subprime mortgage meltdown sent auto sales plummeting to nearly 10 million in full-year sales in 2009, down from nearly 17 million in 2005.
“Right now cars that carry people or carry things are doing very well,” said TrueCar.com senior analyst Jesse Toprak. “Last month we had some of the highest gas prices, but SUV and truck sales continued to climb. The rebounding housing market has a lot to do with it, but also simply a very high level of pent-up demand.”
Americans are spending more on their cars, too.
“Consumers spent over $31,000 on the average transaction price,” said Toprak. “That’s within a couple of hundred dollars of the all-time high.”
Simply put: Macroeconomic concerns and scary prognostics about growing U.S. debt and what to do about it is not keeping Americans out of showrooms.
“The positives still outweigh any of the negatives out there, any of the uncertainty in Washington or any of the international events. Housing, jobs, consumer credit, stock market performance, is all leading to some good business,” Kurt McNeil, GM’s vice president of U.S. sales, told CNBC on Thursday. “We’re starting to see the American family return and start to shop a little more, that’s why you’re seeing mid-crossovers, small utilities and full-sized utilities all up in pretty decent numbers.”
(Click here for more about GM’s March sales performance.)
While GM’s car sales were flat last month, truck sales were up 6 percent while SUVs and CUVs rose 14 percent. Ford unloaded over 67,000 of the country’s best-selling vehicle, the Ford F Series pickup truck, which saw the best monthly and quarterly performance in six years.
One of the weaker March performers of the biggest automakers was Toyota Motor Corporation (TYO:7203), which saw its U.S. segment sales rise only 1 percent compared to a 26.6 percent spike in January.
“If we look at sales at this time last year Toyota pushed out some really aggressive numbers for the Camry and the Corolla,” said Gutierrez. “But now we’re seeing the Camry facing some very stiff competition from the likes of the Ford Fusion, which had its best month on record, the Honda Accord and the re-designed Nissan Altima.”
German automaker Volkswagen AG (FRA:VOW3) saw the best March sales for its U.S. operations since 1973, due largely to growing demand for its TDI clean diesel vehicles that consistently make up about a third of total sales volume due to their hybrid-like fuel economy.
GM, Ford, Chrysler, Toyota, Volkswagen and Nissan Motor Co. Ltd. (TYO:7201) combined sold 1,023,385 vehicles in the U.S. last month. Honda Motor Co. Ltd. (TYO:7267) had yet to announce its March sales numbers by the time this article was published.