DETROIT (Reuters) - A stronger U.S. housing market and lower fuel prices boosted sales of full-size pickup trucks and compact sport-utility vehicles in April, helping the U.S. auto market maintain its strong sales pace for a sixth straight month, analysts said.
Gas prices have been steadily declining since February. The average price of a gallon of regular gasoline in April was down 8 percent from the same month in 2012. Meanwhile, housing has emerged as a bright spot in the U.S. economy.
“Relatively lower gas prices coupled with small business demand improving for trucks resulted in a strong showing for small and large pickups in April, a trend we expect to see strengthen even further for the rest of 2013,” TrueCar.com analyst Jesse Toprak said.
The U.S. auto industry’s annual selling rate will be 15.25 million vehicles in April, according to economists polled by Thomson Reuters. This would mark the sixth month that the sales rate has held above 15 million.
Automakers report April U.S. auto sales on May 1.
Large pickup truck sales rose 26 percent in April compared to the same month last year, the largest jump of any major vehicle segment and more than double the industry’s overall auto sales increase during the month, according to Kelley Blue Book.
Sales of compact crossovers, such as the Ford Escape and Honda Motor Co’s CR-V, shot up 23 percent. Together, trucks and crossovers account for nearly a quarter of the U.S. auto market in April, up from about 21 percent a year ago, KBB data show.
Truck sales may push General Motors Co’s (GM.N) U.S. market share to 18 percent in April, up from about 17 percent in March.
GM is expected to shrink its inventory of large trucks to make room for its new lineup of pickups to be introduced over the next two months. The largest U.S. automaker is expected to have 96 days worth of supply of its trucks, down from the 117 days in March, Barclay Capital analyst Brian Johnson said.
Both GM and Ford Motor Co (F.N) are expected to post slight gains in U.S. market share in April compared to the previous year, according to auto research firm Edmunds.com. Toyota Motor Corp (7203.T) and Honda are expected to show a drop in share.
The overall strength in the U.S. auto market coincides with rising vehicle prices, according to J.D. Power and Associates. During the first four months of the year, prices on new vehicles rose 3.1 percent for an additional $13.2 billion in revenue.
Rising prices are the result of new vehicle designs, but also a newfound discipline among automakers to refrain from lavishing incentives that hurt resale values.
Nearly 60 percent of U.S. dealers surveyed by RBC Capital Markets said incentives in April were in line with the previous month’s levels. Just 53 percent said the same in March.
U.S. auto executives, including Ford Chief Executive Alan Mulally, have raised concerns about the weak Japanese yen, which is trading at just under 98 to the U.S. dollar, compared to 78 at the start of October.
The weak yen gives Japanese automakers like Toyota more room to offer richer incentives and lower prices. But rather than cut prices, Japanese rivals are more likely to make entertainment and navigation features more widely available on their vehicles, Barclay’s Johnson said.
“One thing that we’re going to have to watch very closely is what happens competitively as the Japanese competitors are able to benefit from the weak yen,” Ford Chief Financial Officer Bob Shanks said during a call to discuss Ford’s first-quarter results.
“We are starting around the world, not just in North America, very selectively and very early to see some signs they are taking advantage of that,” Shanks said.
Editing by Bob Burgdorfer