UPDATE 6-US Feb auto sales rise to highest level in 4 years

Thu Mar 1, 2012 5:38pm EST

* GM sales up 1.1 pct, confounding expectations of a decline

* Automakers see shift to compact cars as gas prices spike

* February sales helped by rising consumer confidence

* Chrysler US sales up 40 pct in Feb, Ford up 14 pct

* Annual sales rate jumps to 15.1 mln, vs expected 14 mln

By Deepa Seetharaman and Ben Klayman

DETROIT, March 1 (Reuters) - U.S. auto sales rose nearly 16 percent in February and the annual sales rate leapt to its best level in four years, helped by a surprising sales gain by General Motors Co and strong results from Chrysler Group LLC and Ford Motor Co.

For a second month in a row, sales surpassed even the most optimistic expectations. Analysts ascribed the gains partly to rising consumer confidence and upbeat U.S. economic data.

"That in itself is probably a big green-light indicator for consumers," said TrueCar.com analyst Jesse Toprak. "It's telling them it's OK to buy a car. You'll be fine."

The annual sales rate, a closely watched industry yardstick, jumped to 15.1 million vehicles, according to Autodata, the best monthly showing since February 2008, before the financial crisis that sent Detroit into a tailspin.

Analysts had expected an annual pace of 14 million vehicles, with the high estimate at 14.4 million.

Vehicle sales rose 15.7 percent to more than 1.1 million.

The gains came even as fuel prices shot up 30 cents a gallon last month, which spurred compact car sales. Sales of Ford's Focus small car more than doubled in February.

Toprak said the wider availability of financing last month helped some consumers offset the rising cost of fuel. American drivers also sought to replace their aging vehicles, which contributed to the better-than-expected sales performance.

"There are a number of factors that are helping release this pent-up demand," GM's U.S. sales chief, Don Johnson, told analysts on a conference call. "Perhaps the most encouraging sign is that home builders are becoming more optimistic."

Some analysts and industry executives have said that the U.S. auto sector will not recover significantly until U.S. home prices pick up and consumers feel more prosperous.

The auto industry is now in its third year of a fitful recovery from a severe slump that led to the bankruptcies of GM and Chrysler in 2009. The U.S. industry was selling nearly 17 million vehicles a year on average in the 10-year period ending in 2007.

Last year, the industry sold 12.8 million vehicles.

NO 'MASS DEFECTION' FROM TRUCKS

Short-term fluctuations in fuel prices will not hurt demand for new vehicles this year, but they could influence consumer preferences on what types of cars to buy, analysts said.

Analysts are watching gasoline prices, which early last year contributed to a softening in the economy that nearly pushed it back into recession.

Chrysler posted a February U.S. sales increase of 40 percent compared with the year-ago period. Ford saw a 14 percent rise, Volkswagen AG was up 42.5 percent, Kia Motors Corp gained 37.3 percent and Nissan Motor Co Ltd was up 15.5 percent.

But sales of trucks and sport-utility vehicles were better than expected in February, analysts and executives said.

This is in stark contrast to spending habits in 2008 when average gasoline prices first topped $4 a gallon, spurring a "mass defection" from trucks to smaller cars, said Al Castignetti, head of the Nissan brand in North America.

"Every time it happens, up until this point, we've seen the exodus," he said. "Is the American public being conditioned to accept higher gas prices?"

Auto sales are watched as one of the earliest indicators of U.S. consumer demand and the willingness of Americans to finance big-ticket purchases.

U.S. auto sales have benefited in recent months from consumers' need to replace aging vehicles, which many delayed during the depths of the economic downturn. The average vehicle on the road is a record 10.8 years old.

GM sold 209,306 vehicles last month, up 1.1 percent from the previous February. Analysts had predicted a decline in GM sales as the No. 1 U.S. automaker offered fewer incentives compared with a year earlier.

Ford sold 179,119 cars and trucks in February, while Toyota Motor Corp sales rose 12.4 percent to 159,423 vehicles.

Chrysler, the U.S. automaker majority-owned by Fiat SpA , sold 133,521 cars and trucks last month. Volkswagen sold 30,577 vehicles, and new vehicle sales at Nissan rose to 106,731 last month.

GM shares gained 1.7 percent to close at $26.47 on Thursday, while Ford shares were up 2.3 percent to $12.66.

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Comments (2)
onewayout wrote:
If this number, units sold, is such a leading indicator of consumer confidence I am sure Washington is doing all it can to push this number up. One way is to encourage all Government departments with an auto budget buy new autos. The municipal arms of government have lots of departments to buy vehicles, with you tax dollars I might add, federal and local. As you drive around town during business hours count how many city, new city vehicles you see, for fun, see how many are “hybrids.”
In addition, programs like this help these companies pay back the money loaned to them. They spend your tax dollars to buy their vehicles so they can pay you back… go figure that one out. Also, helping big auto helps secure votes, also greases the wheel that drives the cozy gov/auto affair. In addition, steak vs hamburger purchasing power will see more, formerly high class auto buyers seeking to cut cost. Gas prices may have so effect but the lest of all of these mentioned.
My point is this, like every thing else that doesn’t make sense, is the result of government intervention, as such is unsustainable. In the end it will be just that much further in debt as they attempt to throw enough money into the hole to stop the leak… then they will be the first to jump ship.

Mar 01, 2012 3:03pm EST  --  Report as abuse
Dumbfounded1 wrote:
onewayout you are a rational genius. How enlighten you are at the amazing powers of your dreadful government. I can’t wait ’till the president starts buying all of us houses to get re-elected. Let me guess we should cut taxes and spend more on the military so we can balance the budget.

Mar 01, 2012 6:54pm EST  --  Report as abuse
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