U.S. auto sales rise in January

Business

February 2, 2012

2012 already looks like a winner for automakers

THE ASSOCIATED PRESS Associated Press Thu Feb 02, 2012, 07:53 AM EST

DETROIT — 2012 is already looking like a winner for automakers — just one month into the year.

U.S. sales of new cars and trucks rose 11 percent to 913,287 in January. New models, low interest rates and better loan availability helped buyers overcome lingering worries about the economy and pushed the sales pace to its highest level since the Cash for Clunkers program in August 2009.

Chrysler had its best January in four years. Toyota and Honda were back in the game, getting boosts from important new vehicles. Volkswagen, which wants to aggressively expand in the U.S., reported big increases. The only loser among the major automakers was General Motors Co., whose sales fell 6 percent from a strong January last year.

"For the first time in several years, we are starting the year off with a warm and fuzzy feeling," said Jesse Toprak, vice president of industry trends for TrueCar.com.

January's sales pace was even faster than December's, a relief for the industry after a bumpy 2011. Sales started at a healthy pace last year but plummeted after the Japanese earthquake in March caused car shortages and didn't recover until the final four months of 2011.

If sales stay at the same pace as this January, they would reach 14.2 million, up from 12.8 million in 2011, according to Autodata Corp. While that's below the 2000 peak of 17.3 million, it's better than the 10.4 million trough in 2009.

One reason car sales are improving is that buyers need to replace aging vehicles. The average age of a vehicle in the U.S. is a record 10.8 years, nearly two years older than a decade ago.

Coverage of the glitzy Detroit auto show at the start of the month may have piqued buyers' interest. Unseasonably warm weather may also have drawn some to dealerships, but Ford's U.S. sales chief Ken Czubay said the weather effect was probably a wash.

Frigid temperatures can also boost sales because older cars may not start during a cold snap, he said.

Chrysler's January sales jumped 44 percent, led by surge in demand for its revamped 200 and 300 sedans. Chrysler sold 7,007 of the 200s last month, more than eight times the number a year earlier. Sales of the 300 almost quadrupled. Chrysler also reported its first full-year net income since 1997, helped by its revamped lineup.

Toyota Motor Corp.'s sales rose 7.5 percent on strong demand for the new Camry, which went on sale in October. Camry sales rose 56 percent in January and the sedan remained America's best-selling car, a distinction it has held for nearly 15 years. Sales of the Prius hybrid rose 9 percent.

Toyota's U.S. sales chief Bob Carter said earthquake-related inventory problems are still affecting the company's small SUVs, like the RAV4 and Highlander.

But Toyota and Honda Motor Co. are getting closer to a full recovery from the problems.

David Whiston, auto equity analyst for Morningstar, said inventories should be back to normal by this summer, when sales should be robust.

Honda sales were up 9 percent on the strength of the new Civic small car.

"It's gratifying to see how many Civics we can sell when we actually have Civics to sell," American Honda sales chief John Mandel said.

GM car sales rose 13 percent thanks to the new Chevrolet Sonic subcompact. But demand for its trucks and crossovers fell. One problem: GM is no longer making the HHR crossover, which contributed more than 7,300 sales last January.

GM also compared unfavorably to last January because its 2011 sales were inflated by rebates and other deals. TrueCar estimated that GM's incentives fell 16 percent to $3,095 per vehicle this January.

GM's sales will likely be down in February, too, because of the incentives it offered last year, warned Don Johnson, GM's vice president of U.S. sales.

GM could see slow sales through the first half of the year, until new models go on sale this summer, Whiston said. The company will offer two Cadillacs, a Chevrolet Malibu and the Spark mini-car.

Sales of the Chevrolet Volt electric car totaled 603. That was less than half the number sold in December and sales fell short of its rival, the Nissan Leaf.

Johnson said sales were affected by government hearings into Volt battery fires and GM's announcement that it will retrofit existing Volts so they are less prone to fires after a severe crash. The company expects sales to pick up now that GM is producing a Volt that's eligible to drive in California's high-occupancy vehicle lanes.

Ford Motor Co.'s sales rose 7 percent. Demand for the Ford Focus small car rose 60 percent, while sales of the Escape small SUV rose 24 percent. Ford is replacing the Escape with a new version later this year, and sales have been strong as dealers offer big discounts to clear out the old models.

Whiston said buyers will have plenty of options this year as Toyota and Honda recover and automakers launch major new products like the Dodge Dart and new versions of the Honda Accord and Ford Fusion.

"It will be a great time to be a consumer going into 2012," Whiston said.

But he cautions that buyers shouldn't expect big price breaks, since there are so many new products and companies are closely guarding their profits.

Buyers paid an average of $31,312 for a new car in January, including an average incentive of $2,206, according to Edmunds.com. Five years ago, buyers were getting about the same amount in incentives, but the average vehicle price was $27,966.

Other companies reporting sales Wednesday:

-- Volkswagen of America reported a 48 percent rise in U.S. sales, led by the Jetta and Passat sedans.

-- Nissan Motor Co.'s sales were up 10 percent with big jumps for the new Quest minivan and the Altima sedan.

-- Hyundai Motor Co.'s sales rose nearly 15 percent thanks to the new Veloster small car.