Despite Rising Gas Prices, Car Sales Surge to 15-Million SAAR
Despite climbing gas prices, February car sales surged to 1.15 million vehicles, a 16-percent rise from a year ago. That put February's Seasonally Adjusted Annual Rate (SAAR) of sales at 15 million vehicles, the highest level since February 2008.
February car sales proved to be even more robust than analysts had predicted. Edmunds.com had been at the high end of analysts' forecast at 14.4 million. The higher-than-expected sales were not the result of higher incentives. Incentives were the lowest of any February since 2003, according to an analysis of Edmunds.com, at an average of $2,193 per vehicle. Nor were sales buoyed by inflated fleet sales as was the case in January. A normal rate of about 20 percent of total industry sales went to rental car, commercial and government fleets.
No, auto executives and analysts concur, the surge in car sales came on the strength of an improving economy, combined with pent-up demand finally being unleashed. Falling unemployment, rising consumer confidence, an improving housing market and wider availability of low-interest credit made consumers finally feel comfortable enough to make the big-ticket purchase of a car.
"We saw great, great (showroom) floor traffic, said Nissan sales chief Al Castignetti. And, as automakers and Edmunds.com data shows, the traffic and sales accelerated throughout the month, beginning with very active Presidents' Day holiday to the final weekend of the month.
Since 2008, the scrappage rate has been running well below the sales rate, causing a build-up in pent-up demand. The average age of vehicles on American roads stands at more than a decade, a record. Automakers have been waiting for consumers to finally say enough is enough of their old rides. Finally increasing repair costs, strong trade-in values and much-improved fuel economy in new models as gas prices climb helped convince consumers to buy. As Ken Czubay, Ford's head of U.S. sales operations, said new-car sales are being made not only in the showroom but also the service lane.
February's market strength came from sales of small, fuel efficient cars, many of which didn't exist during the last major gas price spike in 2008. Diesel models and some hybrids were in strong demand.
But sales increases were seen across the board, including trucks and large SUVs, luxury vehicles and sports cars. General Motors' Don Johnson, who heads U.S. sales operations, said heavy-duty truck sales to commercial fleets were strong. "Commercial sales are a good barometer for the economy," he added. Nissan's Castignetti noted every traditional body-on-frame truck and SUV in the automakers line posted a gain. "And I can't explain why," he said in an interview.
Luxury sales were strong, with BMW, on the strength of its just-launched BMW, stealing the lead from Mercedes-Benz for February with Lexus, with its new GS, in close pursuit. Even long-languishing sports-car sales showed signs of life. Virtually every auto manufacturer saw an increase; only a few brands saw drops from a year ago. And auto executives say the strength in new-car sales is coast to coast.
Here are highlights of some automakers' performance.
GM: Ekes Out an Increase
General Motors had signaled February sales would be down 6 percent from last February when the automaker had aggressive incentives in place to kick start the new year. Instead, GM reported sales up a tad — 1.1 percent — at 209,306 vehicles. The boost came from Chevrolet, and specifically its small fuel-efficient cars. Cruze sales soared passed the 20,000-unit mark; the Sonic, which replaced the Aveo, registered a hefty 7,900 sales. The Volt kicked in more than 1,000 sales.
Though overall Buick sales were down, its new small-car entry, the Verano, had sales of 1,688. The LaCrosse posted a 21-percent gain, largely on the strength of the mild hybrid eAssist system that GM just introduced. One of every four LaCrosse models sold is being purchased with the 36-mpg system.
Other double-digit sales increases came from the Chevrolet Equinox and Camaro and GMC Terrain.
Except for Chevrolet's increase, GM's other brands were down to flat from a year ago. GMC was even with last February, Buick was down 11 percent and Cadillac, set to introduce two significant new models this year, was off 27 percent with its high-volume CTS down 24 percent.
Ford: Cruises to 14-Percent February Sales Gain
Concern about rising fuel prices drove some of Ford Motor Co.'s 14-percent sales gain in February, according to company sales executives, resulting in overall sales of 179,119 vehicles sold and a 19-percent gain in retail sales compared with February, 2011. And for once, even the Lincoln brand chipped in, with sales at Ford's luxury-vehicle unit up 16.2 percent.
At least partially reflecting increasing consumer concern about fuel prices, Ford's top-gaining model for the month was the Focus compact car, with sales up 114 percent to a plump 23,350 units; the comparison comes, however, against February, 2011, when output of the new-generation Focus still was ramping up and against the backdrop of generous incentives for Ford's well-regarded small car. The Focus' outsized February performance may to some degree have been delivered at the expense of the subcompact Fiesta lineup, which saw sales drop by 12 percent.
The Mustang also enjoyed a monster month in February, with sales leaping 98.8 percent to 7,351 units, as U.S. sales boss Ken Czubay said mellow winter weather in much of the nation may have helped spur "early spring" sales of the pony car.
But the rest of Ford's car lineup didn't fare so well in February, with the Taurus sliding 23 percent and even sales for the always high-performing Fusion off by 5.8 percent, although the midsize Fusion's 21,773 sales for the month were hardly shameful.
The other side of the fuel-economy conversation may be playing out in the truck segment. Czubay said the availability of the high-performing EcoBoost V6 in the F-Series was a factor in the 25.9-percent gain for the Ford's light-duty pickup lineup despite almost daily increases in gasoline prices. "Consumers are voting for Ford," in the pickup market, said Czubay, who speculated Ford likely increased pickup market share for the month. Save a 14.9-percent decline for the Flex, all of Ford's utility vehicles also recorded sales increases compared with last February, led by the 8.1-percent improvement for the Explorer crossover.
At Lincoln, a rare positive sales month was fueled by a 40.1-percent improvement in sales of the brand's volume leader, the MKZ midsize sedan. The fact that a highly efficient hybrid version of the MKZ is available for the same price as the conventionally powered V6 MKZ might also have helped propel sales for the sedan. Lincoln's MKS flagship also delivered a 50.9-percent sales gain, to 857 units for the month. Every Lincoln model except the Town Car — now sold only to commercial purchasers — made a sales gain in February.
Toyota: Talks Momentum After Double-Digit February Gain
Toyota Motor Sales USA Inc. sold 159,423 vehicles in February, a 12.3-percent gain that seemed particularly welcome for a company that speaks of renewed momentum at the start of this year after 2011 presented a variety of sales and supply challenges. Toyota executives said looming high gasoline prices have customers looking once again for fuel-efficient models and the company is well-positioned, thanks to a good inventory of the Prius hybrid-electric vehicle and shipments just now beginning for the Prius C, the subcompact addition to the growing Prius lineup that promises a 50 miles-per-gallon combined fuel economy rating and a starting price of less than $19,000.
So Toyota's February's sales performance — along with the larger context of a scintillating Seasonally Adjusted Annual Rate for the month that Toyota sales boss Bob Carter projected will be 15 to 15.1 million — is seen as a preview of what may become even more robust consumer demand in an improving economy. Carter said the month's SAAR means the first two months of 2012 could be the industry's best since 2008 — and the desire for a new vehicle that costs less to fill at the gasoline station could sustain the industry's strong start. "Fuel economy is on top of mind with nearly every consumer," Carter assessed of current demand.
Against this backdrop, Toyota's actual results were a mixed bag. The new-generation 2012 Yaris subcompact improved sales by 85.6 percent and the Prius burst to a 52.1-percent gain, as both seemed to connect with the new crop of consumers shopping primarily for fuel economy. But at the same time, the evergreen Corolla compact car might be becoming too evergreen in a compact-car segment teeming with new, more emotionally designed alternatives; Corolla sales slid 14.4 percent, although its 22,148 units sold nonetheless was a competitive number. Sales for the midsize Camry also took a healthy 26.9-percent uptick compared with February, 2011, and Carter said sales of the Camry Hybrid exploded by 262 percent for the month. The truck portion of Toyota's showroom didn't perform up to the car business' standard, although overall sales were mostly flat thanks to a strong 35.3-percent gain from the Tacoma midsize pickup (to a robust 10,662 units) and small gains for the RAV4 and Sequoia. But the aging 4Runner was down 18.4 percent and the Sienna minivan dropped 13.1 percent. There were also declines for the Highlander crossover and Tundra fullsize pickup.
Toyota's Lexus premium-vehicle division enjoyed a huge boost from the introduction of the new-generation 2012 GS midsize sedan, sales for which exploded by 586 percent to 2,396 units, moving past the entry-level LS and challenging the best-selling ES's 2,997 units sold in February. Every Lexus passenger-car model save the HS hybrid was up for the month, while two of Lexus' three trucks, the RX and GX, had respective declines of 11.8 percent and 33.1 percent. Sales for the Lexus LX were up 40.3 percent to 383 units.
Chrysler: Best February Since 2008
Continuing to outpace the industry, Chrysler Group reported its best February since 2008 with sales of 133,521 units, a 40-percent increase compared with the 94,102 vehicles the automaker sold last February. Most impressive is the fact that Chrysler achieved a sales increase that surpassed forecasts with a drastic reduction in incentives. Chrysler spent about a quarter less per vehicle in incentives this February compared with last. Equally impressive, every model in the Chrysler line posted a year-over-year sales gain. Fiat had its best-ever month for the 500.
Sales of Chrysler brand vehicles soared 114 percent over a year ago for its best month since May 2008. The midsize 200 sedan, which replaced the Sebring, and the bigger 300 posted triple digit sales gains. The Chrysler Town & Country minivan had its best February in four years. Jeep brand sales increased 30 percent for the brand's best February since 2007. All five Jeep models record double-digit sales gains, led by the Jeep Grand Cherokee at a 47-percent increase for its highest sales in six years.
Dodge brand sales rose 27 percent to its highest level since 2008. All six models posted sales gain with the Charger and Avenger sedans leading the way. The Challenger set a new monthly sales record with sales 14 percent higher. The Journey crossover had a 28-percent hike. Grand Caravan minivan sales were up 20 percent for its best February sales in five years.
Honda : Recuperation Underway
The raw numbers may not be as flashy as those posted by many rivals in February, but American Honda Motor Co. Inc.'s 7.8-percent sales gain for month had several positive indicators, not the least being a crucial revival for one the brand's crucial nameplates, the Civic compact car. Civic's sales jump of 36 percent for the month meant the seminal small car's 27,087 sales comprised nearly one-quarter of the company's total sales of 110,157 for the month.
The new-generation 2012 Civic, launched last June, endured the double hit of limited initial availability due to the March, 2011, earthquake and tsunami in Japan — and a lukewarm reception from the press. And although February's numbers compare with month last year when Honda still was selling the previous-generation Civic, there's no doubt the car's sales will earn the month's first-place crown in the ever more hotly contested compact-car segment. At least for now, the Civic is back to its former glories.
Every other Honda car line was down in February, however, despite the specter of rising gasoline prices, a situation that historically plays to Honda's strengths. Sales for the Fit subcompact declined 3.4 percent in February, as the aging fuel-sipper continued to trail an army of newer and more efficient rivals. Accord sales were down 6.3 percent to 20,702, as Honda prepares to launch an all-new generation of its midsize sedan and coupe this fall. Honda two hybrid cars, the Insight 5-door and CR-Z coupe, also were off deeply in February, with sales respectively tumbling 56.9 percent and 59 percent.
In trucks, Honda's new-generation CR-V put up a healthy 24.5-percent sales increase in February, pushing 24,759 units out the showroom door to become the brand's second-best seller. Sales for the Ridgeline midsize pickup, Odyssey minivan and Pilot midsize crossover all improved compared with last February, led by the Ridgeline's 44.8-percent increase to 1,370 units. The Crosstour hatchback variant of the Accord was the only Honda truck model with a sales pullback for the month, declining by 39.9 percent to 1,070 units.
Honda's Acura upscale division saw overall sales improve just 0.1 percent, although every Acura car model except the RL flagship improved sales compared with February, 2011, and the TSX entry sedan (and wagon) had its best-ever February. Sales for each of Acura's three crossover models dropped for the month: the MDX midsizer was down by 10.5 percent to 3,583 units, the RDX was off by 28.1 percent and the ZDX moved just 56 copies, a 72.8-percent plunge from the same period last year.
Nissan: Altima Going Out with a Bang
Nissan North America, Inc., which includes the Nissan and Infiniti brands, sold 106,731 vehicles in February, an increase of 16 percent from a year ago.
The Nissan brand posted a 17-percent sales increase to 97,492 vehicles for a new February record. The division was led by the Altima, which had a new February record and sales a hefty 58-percent over the prior year. The next-generation Altima will be introduced at the New York auto show in April and goes on sale in June so the current model is in sell-down mode. The Rogue crossover also set a new February record with sales up 18 percent to 13,423 vehicles. Despite high gas prices, sales of the small but aging Sentra as well as the boxy Juke and new Versa were down.
At the other end of the spectrum, sales of all Nissan trucks, including the Frontier and Titan, as well as SUVs, notably the Xterra and Pathfinder, posted year-on-year gains. "We were up in body-on-frame vehicles and we were expecting to see declines," said Nissan's sales chief Al Castignetti. "I can't explain."
Infiniti, which struggled last year to replenish inventory curtailed by the Japan earthquake, eked out a small 1-percent gain in sales to 9,239 vehicles sold. The huge QX luxury utility set a new February high of 1,162 vehicles for a 29-percent increase. Sales of the G sedan were up 7 percent to 4,334 vehicles.