U.S. auto sales surged by 27 percent in February, exceeding the most bullish analyst forecasts as the lure of discounts from automakers led by General Motors Co outweighed concerns about higher oil prices for car shoppers.

The February sales tally, which represents one of the first snapshots of U.S. consumer demand, was the strongest since August 2009 when the government's cash for clunkers credits spurred a short-lived boom at dealerships.

Auto executives attributed the unexpectedly large gains to both the lure of discounts -- including cheap lease deals -- along with improving consumer confidence and easier credit.

On an annualized basis, the sales rate for the month was 13.4 million vehicles, according to industry tracking firm Autodata. That was up from a sales rate near 12.6 million in December and January.

GM led with a 46 percent sales gain in February, stoked by incentives that also led the industry at an estimated $3,700 in spending per vehicle on average.

Toyota Motor Corp, which was bouncing back from depressed sales a year earlier, posted a 42 percent sales gain. Nissan Motor Co had a 32 percent increase after offering more aggressive discounts of its own.

Sales of trucks, SUVs and other light trucks were up almost 32 percent in February despite the sharpest spike in gasoline prices at the pump since Hurricane Katrina in 2005.

Still, investors remained on edge that a sustained spike in oil prices could push American consumers toward smaller cars or toward delaying purchases as they did in 2008.

That would crimp earnings at the Detroit automakers despite substantial gains over the past two years in rolling out more fuel-efficient small cars, analysts said.

It's our No. 1 risk and we're not going to lose sight of it, said Paul Ballew, economist for insurer Nationwide. The domestic automakers still depend heavily on trucks and SUVs for profits.

Shares of Ford Motor Co and GM fell by 2.6 percent ant 1.7 percent, respectively, extending a losing streak that began in early January.

Sales for Honda were up 22 percent. Ford and Chrysler Group lagged the industry, with sales gains of 14 and 13 percent, respectively.


The success of the aggressive discounts by both GM and Nissan in February raises the prospect that rivals will respond with stepped-up incentives of their own, cutting into projected profits across the industry.

But Ken Elias, a partner at consulting firm Maryann Keller & Associates, said GM had taken advantage of its lower cost base after its 2009 bankruptcy to put pressure on its rivals.

GM's deals during the month included loyalty bonuses of $1,000 to current GM owners and payments to close out existing leases for return buyers.

GM executives had complained that the automaker's inability to sell cars through subsidized leases had cost sales in 2009 and 2010.

But in February, its GM Financial unit -- a competitor to former the GMAC now known as Ally Bank -- was more aggressive in writing leases and funding subprime loans.

It's more affordable, and the fact of the matter is obviously GM feels this is something that it needs it do, Elias said.

Both GM and Nissan said they had already throttled back spending on the sales incentives in March.

Our goal is very clearly to continue to have a very disciplined approach, GM sales chief Don Johnson said. Our incentive costs will start to moderate in March.

In a measure of its momentum in February, GM's Cadillac CTS sedan outsold the six combined models under Ford's luxury Lincoln brand. Meanwhile, GM's Buick brand also outsold Toyota's luxury Lexus brand.

Ford said its average transaction price was up 3 percent in February from a year earlier. Ford's sales chief, Ken Czubay, said the automaker would not be drawn into a costly price war with rivals.

We're going to stay on plan, he said. Market share can come and go depending on incentive spending.


Mark Templin, the U.S. sales chief for Lexus, said the luxury brand had underestimated demand for luxury vehicles in both January and February and lost sales as a result by leaving inventories too thin. Lexus sales were flat in February.

The market exceeded our expectations in January and February, Templin said. We were right on plan but the market moved a little faster than we did.

Bob Carter, who heads U.S. sales for the Toyota brand, said the February sales gain showed that the Japanese automaker had bounced back from the safety and sales crisis of a year earlier.

U.S. safety regulators cleared Toyota electronics of any role in reported episodes of runaway acceleration in February and agreed to close an investigation on sticky accelerator pedals after the automaker agreed to recall another 2.2 million vehicles.

That news combined with Toyota's stepped-up marketing and an improving economy provided the lift to February sales, Carter said.

We feel that we've got a good momentum at the start of 2011, he said.

Although analysts have cautioned that the recent rise in oil prices could slow or even derail the industry's recovery in sales, little of that feared impact was visible in the February sales results.

Trucks remained popular in February with American buyers, despite forecasts for $4-per-gallon gasoline prices by summer. Sales of GM's Chevrolet Silverado pickup truck were up 60 percent. Ford's market-leading F-Series trucks were up 21 percent.

A sudden, sharp spike in oil prices could rattle global consumer confidence in the economic recovery in the short term, GM CEO Daniel Akerson told Reuters. Consumers would likely look for even more fuel-efficient vehicles.

Other automakers also raised concerns about the pressure from higher gas prices in the remainder of the year.

Customers in the U.S. are the most sensitive to oil prices. When they go up, hybrids fly out of showrooms and SUVs and pickup truck sales fall, Toyota Executive Vice President Takeshi Uchiyamada told reporters on the sidelines of the Geneva auto show.

Jesse Toprak, an analyst at TrueCar.com, said car shopping patterns already appeared to be changing. Consideration of cars considered to be fuel efficient went up 20 percent over the course of February, he said.

The behavior in the market will likely favor smaller cars in March based on the shopping patterns, he said.

(Additional reporting by Helen Massy-Beresford, Bernie Woodall and Chang-Ran Kim in Geneva, editing by Matthew Lewis)