* Third straight month of weaker-than-expected sales
* Incentives used to attract shoppers during cold winter
* GM, Ford, Chrysler, Nissan top sales expectations
* Toyota, Honda fall short of forecasts
* Industry in good shape heading into March -Ford exec
By Bernie Woodall and Ben Klayman
DETROIT, March 3 U.S. auto sales in February
finished even with the year-earlier period as hefty incentives
to lure customers into dealerships late in the month could not
overcome cold and snowy weather.
February's sales fell less than 300 vehicles from last
year's 1,193,872 light cars and trucks. While General Motors Co
, Ford Motor Co and Chrysler Group all reported
stronger-than-expected sales, the higher incentives raised
concerns about industry profitability in the future.
The annualized sales rate for the month finished at 15.34
million vehicles, just short of the 15.4 million expected by
analysts polled by Reuters. It was the third month in a row that
U.S. auto industry sales were weaker than expected.
The frost on sales for January and February will thaw in
March as temperatures rise and customers return to showrooms in
greater numbers, some industry analysts said.
However, late February's high customer incentives, the
discounts to encourage buyers to visit showrooms, will carry
over into March, cutting in to companies' profit, several
Larry Dominique, executive vice president of industry
research firm TrueCar, said there are about 80 days of supply on
dealer lots, compared with a more desirable level of 60 to 65
"We have on average two-and-a-half months of supply on
dealer lots," said Dominique, adding that most automakers have
not cut production, which will lead to even more oversupply,
which will increase pressure to raise incentive levels further.
Dominique pointed out that companies book the sales for
their balance sheets on the wholesale level, so "every field
agent for every manufacturer" is going to press dealers to take
more vehicles when they are already oversupplied.
Monthly auto sales are typically an early indicator of
consumer demand. But January and February are usually two of the
slowest sales months every year.
OLD HABITS DIE HARD?
"The fear is going back to the old ways of having to sell
the deal and not the car after years of staying clean," said
Jesse Toprak, chief analyst for research firm Cars.com.
"(Dealers) don't want the companies to fall off the wagon when
it comes to incentives."
For now, the incentives are not out of control, but Toprak
warned, "it might get a bit out of control this summer and
beyond if the pace of inventory accumulation does not slow
Industrywide, the average incentive in February was about
$2,633 per vehicle, up 5 percent from a year earlier and up 3.3
percent from January, according to TrueCar.
Partly offsetting the higher incentives was a 3.6 percent
rise in average transaction prices, or the figures at which
autos are sold.
Unlike January and February, March is often one of the best
months for U.S. auto sales. The fact that March has five
weekends also bodes well for the U.S. auto industry, said John
Felice, Ford's U.S. sales chief.
"Despite all the challenges, it was a robust market," Felice
said of February, "and we feel that as we head into March we'll
be in very good shape."
GM's U.S. sales in February dipped 1 percent but easily beat
analysts' expectations of a 6 percent slide, with sales of
While GM's Malibu, Cruze and Sonic passenger cars each
posted double-digit gains, sales of the company's top-selling
Chevy Silverado pickup truck fell 12 percent. The Silverado's
slide compares with a rise of 2.6 percent for Ford's F-Series
pickups and a gain of 26 percent for Chrysler's Ram 1500 pickup.
GM officials said they trimmed incentives on their trucks
from January even as their rivals boosted them. However, Kelley
Blue Book analyst Alec Gutierrez said the problem was that GM's
new trucks were not enough of a departure from their rivals'
current models to make a huge difference.
"They are only marginally better than Ford's previous
generation truck and the new Ram," he said, referring to the
Silverado. He added that there was nothing to suggest a consumer
should pay a premium for the Silverado.
In a research note last week, Barclays analyst Brian Johnson
said intense competition in the segment has left GM with the
"least successful large pickup truck launch over the last 15
years in terms of share and pricing." While the Detroit company
has been able to raise prices, it has cut incentives more slowly
than with full-size truck launches in the past.
FORD SLIGHTLY BEATS, TOYOTA MISSES
Ford slightly beat expectations last month by posting U.S.
sales of 183,947 vehicles, down 6 percent from a year earlier.
Ford is the second-largest in the U.S. market by sales.
GM and Ford, which ranks second in the U.S. market, are
offering some of the heftiest incentives.
Toyota Motor Corp, the No. 3 seller in the U.S.
auto market, saw February sales fall 4 percent at 154,866
vehicles, widely missing expectations of no change from a year
ago. Honda Motor Co reported a 7 percent sales decline
that also missed analysts' estimates.
U.S. February sales of Chrysler Group and Nissan Motor Co
topped analysts' expectations.
Chrysler, a unit of Fiat Chrysler Automobiles, said
demand for its two top-selling Jeep models, the Grand Cherokee
and the Cherokee SUVs, had helped push its total monthly sales
up 11 percent to 154,866 vehicles. Analysts had expected a rise
of 8 percent.
Nissan showed a gain of 16 percent, led by a 73 percent jump
in sales of its Rogue crossover vehicle. Analysts had expected
an increase of 12 percent.
Volkswagen AG reported U.S. sales of 27,112,
down 14 percent. Its best-selling vehicle, the Jetta, had sales
of 11,908, down 0.5 percent.
GM shares were down 0.1 percent at $36.15 and Ford shares
were down 1.2 percent at $15.20 in late afternoon trading on the
New York Stock Exchange.