DETROIT U.S. auto sales jumped 24.3 percent in March, the strongest result in months, led by a rebound at recall-hit Toyota Motor Corp (7203.T), which offered record incentives aimed at putting the crisis behind it.
Toyota sales jumped nearly 41 percent in March, snapping two months of sales declines amid massive vehicle recalls and a rare production and sales halt for the world's biggest automaker.
General Motors GM.UL sales rose nearly 21 percent overall from a year earlier and it led the industry in total vehicle sales. Toyota was second in total sales, while Ford Motor Co (F.N) ranked third after a nearly 40 percent sales increase.
U.S. sales topped the 1 million vehicle mark in March, which was the strongest monthly result since September 2008, excluding August 2009 when "cash for clunkers" incentives drove sales up sharply.
The strength in the United States was also reflected in sales in Europe and Asia, as temporary government scrapping schemes boosted demand.
Industry executives attributed the U.S. sales rebound in part to incentives, pent-up demand from February when snowstorms hit many areas, to a subsiding of headlines on Toyota and some signs of U.S. economic stability.
The U.S. sales increase contrasts with March 2009 when the industry was mired in a deep U.S. sales downturn ahead of bankruptcies by GM and Chrysler.
Only Chrysler among the largest automakers posted a U.S. sales decline in March. Chrysler said sales fell 8.3 percent in March from a year earlier and it planned incentives.
"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand," Edmunds.com Director of Industry Analysis Jessica Caldwell said, adding that April would be a better indicator.
Toyota traditionally has spurned deep discounts, but launched unprecedented incentives in March to try to win back customers, including zero-percent financing for five years on top models such as the Camry sedan.
Don Esmond, Toyota U.S. senior vice president for sales, said on a conference call that incentives would be extended beyond April 5, but offered no specifics.
"We need a little bit of a kick-start to kind of get the market in our direction and we'll continue," Esmond said. "We're not going to walk away from our customers."
GM and Ford had incremental increases in incentives in March from February, according to Edmunds data. Toyota incentives jumped $375 from February to a record $2,256 for the automaker.
GM, TOYOTA SALES NECK-AND-NECK, FORD CLOSE
GM's U.S. sales rose 20.6 percent overall to 188,546 vehicles in March including brands that are being discontinued, pushing it slightly ahead of Toyota's 186,863 in sales.
Ford, which plans to sell its Swedish brand, Volvo, to China's Geely, said March U.S. sales rose 39.8 percent to 183,783 vehicles. Ford expected to gain U.S. retail market share for the 17th time in the past 18 months.
GM said March U.S. sales jumped across all of its four core brands. Newer GM models like the Chevrolet Equinox, GMC Terrain and Buick Lacrosse continued to see strong sales, GM said.
GM Vice President of Marketing Susan Docherty said GM incentives for all of its brands averaged $2,800 in March, falling below the industry average for the first time and the automaker was not interested in buying market share.
"We have been down that road before and know it's a dead end," Docherty said of using high incentives to drive sales.
GM incentives were down $200 in March from February 2010, and $2,000 from a year earlier in J.D. Power PIN data.
Nissan Motor Co (7201.T) U.S. sales rose 43.3 percent in March from the prior year, putting it ahead of Chrysler.
Chrysler, now under the management control of Italy's Fiat SpA FIA.MI, extended sales incentives for most of its 2010 model vehicles through May 3 that were set to expire Thursday including zero-percent financing.
Still, Chrysler incentive spending was down sharply from March 2009, when it had heaped sweeteners on its vehicles to drive sales and stave off bankruptcy.
The Obama administration rejected a Chrysler turnaround plan at the end of March 2009, setting the stage for a government-supported bankruptcy plan.
Hyundai Motor Co's (005380.KS) U.S. sales rose 15.4 percent in March from a year earlier, in line with a forecast that Hyundai USA President John Krafcik gave at the New York auto show earlier this week.
J.D. POWER RAISES FULL-YEAR SALES FORECAST
The seasonally adjusted annualized rate of auto sales was nearly 11.8 million, according to Autodata. U.S. auto sales ran at a 10.8 million vehicle rate in January and 10.4 million rate in February.
Influential tracking service J.D. Power and Associates has raised its outlook for full-year U.S. auto industry sales to 11.7 million vehicles, from 11.5 million vehicles.
Toyota estimates U.S. auto industry light vehicle sales of about 11.5 million for the year, while other automakers expect sales of 11.5 million to 12.5 million.
French and Japanese car sales rose in March, as government incentives boosted demand, while South Korea's Hyundai Motor racked up impressive sales growth despite the end of subsidies in its home market.
Carmakers have benefited from government scrapping incentives in major markets across Europe, but industry experts predict a sales dip as the programs come to an end in some countries.
French car sales rose 12.8 percent in March, French carmakers' association CCFA said on Thursday, while Japanese sales jumped by a quarter to cap a business year that relied heavily on government incentives.
(Additional reporting by James Kelleher, Soyoung Kim, Helen Massy-Beresford and Chang-Ran Kim; Editing by Dave Zimmerman and Richard Chang.