October 1, 2015 / 1:55 PM / 4 years ago

Cheap gas, Labor Day weekend drive automakers' U.S. sales in Sept

(Reuters) - U.S. auto sales surged in September to their strongest in more than a decade, with the Detroit Three clocking double-digit growth as cheap gasoline and ultra-low interest rates drove demand for sport utility vehicles and pickup trucks.

A general view of the front entrance at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. REUTERS/Mike Stone

Sales also got a boost from the calendar, with the entire Labor Day weekend falling in September for the first time since 2012. The holiday weekend is traditionally important for sales.

Total vehicle sales for the month shot up 15.8 percent from a year earlier to 1.44 million cars and light trucks, equal to a seasonally adjusted annual rate, or SAAR, of 18.17 million, according to research firm Autodata Corp.

That topped estimates for a SAAR of 17.6 million and was the highest since the 20.6 million clocked in July 2005.

At this pace, the U.S. auto industry is on track to challenge the record for full-year sales of 17.8 million vehicles set in 2000.

The big three U.S. automakers - General Motors Co (GM.N), Ford Motor Co (F.N) and the U.S. operations of Fiat Chrysler Automobiles NV (FCAU.N) - all reported strong sales at a time when automakers are struggling with slowing demand in China and other markets.

Car sales in China, until recently the profit engine for automakers around the world, have been hit by a cooling economy and a plunging stock market.

GM, the largest U.S. automaker, said its total sales in September rose about 12 percent to 251,310 vehicles compared with the same month last year. (bit.ly/1N4EaGm)

“The U.S. is adding jobs, disposable income is rising, energy prices and interest rates remain low and business continues to invest, but the fact remains this has been a slow recovery,” said Mustafa Mohatarem, GM’s chief economist.

“The economy still has room to grow and so do auto sales, particularly now that the millennials are entering the workforce and starting households,” he added.

Ford’s total sales rose 23 percent to 221,599. Ford-brand SUV sales increased 27 percent, the best in 12 years, while trucks sales increased 23.2 percent.

Fiat Chrysler’s (FCHA.MI) sales increased 14 percent to 193,019, boosted by the continued strength of its Jeep SUV brand. Jeep sales jumped 40 percent.

“On the back of a strong sales industry we were able to achieve our best September sales in 15 years and our 66th-consecutive month of year-over-year sales growth,” said Reid Bigland, head of the company’s U.S. sales.


Volkswagen AG (VOWG_p.DE) said its September U.S. sales increased by just 0.56 percent to 26,141 vehicles, showing the effect of the halt in sales of its 2-liter four-cylinder turbo-diesel engine cars from the market during the month.

The German carmaker faces up to $18 billion in penalties to go along with a severely dented reputation after it admitted to U.S. regulators that it programmed its cars to cheat on emission tests.

Japanese automakers Toyota Motor Corp (7203.T), Honda Motor Co Ltd (7267.T) and Nissan Motor Co Ltd (7201.T) reported a rise of between 13 percent and 18 percent in September sales.

Research firm LMC Automotive in late September raised its forecast for full-year U.S. car and light truck sales to 17.2 million vehicles from 17.1 million.

While low gas prices seem likely to continue to help sales of SUVs and pickups such as the Chevrolet Silverado and Ford F-150, the days of near-zero interest rates look set to end as the Federal Reserve considers raising rates for the first time since 2006. Strong auto sales could help hasten that decision.

For now, though, low rates remain a driver for auto sales.

“The Federal Reserve’s decision (in September) to keep interest rates at the current level paves the way for the U.S. auto market to post strong results for the remainder of 2015,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

Reporting by Sweta Singh and Ankit Ajmera in Bengaluru; Editing by Ted Kerr

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