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March will be test of U.S. auto demand
March 04, 2014, 05:00 AM By Tom Krisher and Dee-Ann

DETROIT — March is the month to watch for the U.S. auto industry.

Sales have been slower than expected so far this year. As the spring thaw begins, automakers will see if the slowdown was due to historic cold temperatures and snowfall — as many believe — or if there are deeper reasons for sagging demand.

“March will give us a sense of how real the recovery is going to be this year,” said Alec Gutierrez, a senior analyst for Kelley Blue Book.

Automakers entered 2014 expecting to sell more than 16 million cars and trucks for the first time since the recession. But so far, sales are on pace to hit around 15 million, which would be 600,000 less than last year. But Gutierrez believes sales will recover reach 16.3 million for the year. The industry sold 16.1 million vehicles in 2007.

“We think there is still plenty of time left this year for sales to rebound and kind of get us back on that pace,” he said.

On Monday, General Motors, Ford and Toyota all reported U.S. sales declines for February. The country’s top three automakers by sales said the month started slowly but sales began to recover in the second half. If that momentum continues into March, fears of a broader sales slowdown may prove to be unfounded.

Industry analysts expect overall sales to rise about 1 percent for the month, a slow pace compared with the 8 percent increase for all of last year.

Dealer inventories, especially for the Detroit automakers, have hit their highest level in five years, putting pressure on companies to clear their lots. At the end of January, dealers had an 89-day supply of cars and trucks, according to Ward’s AutoInfoBank. Detroit automakers had the most, with General Motors at 114 days, followed by Ford at 107 and Chrysler at 105. A 60-day supply of vehicles is considered ideal.

Chrysler and Nissan were able to notch double-digit gains, but discounted some key models to get there. That points to another potential problem if automakers have to offer steeper discounts to shrink their inventories.

For consumers, it means deals. Incentives are the highest they’ve been in three years, averaging $2,633 per vehicle in February, up more than 5 percent from a year ago, according to TrueCar.com, a car buying site.

Larry Dominique, executive vice president of TrueCar, said automaker spending on discounts is growing faster than average sales prices, but he predicted that the bargains will wane as the weather gets warmer and customers go shopping again.

“We expect a return to balance once the winter subsides and inventories ease,” he said.

GM sold just over 222,000 cars and trucks in February, led by the Chevrolet Cruze compact car, with sales up almost 22 percent. But sales of the Chevy Silverado pickup, GM’s top-selling vehicle, fell 12 percent for the month. GM’s overall sales fell 1 percent.

Ford’s sales fell 6 percent to 184,000 vehicles. Sales of the F-Series pickup, its top-selling vehicle, rose just under 3 percent.

Toyota sales fell 4 percent to just over 159,000 cars and trucks.

Volkswagen, which has been struggling in the U.S., reported a 14 percent drop.

Nissan’s sales were up almost 16 percent to just over 115,000, led by the new Rogue crossover. Nissan’s average sales price fell almost 4 percent — more than $1,000 — compared with a year ago, according to TrueCar.

Chrysler sales rose 11 percent to nearly 155,000. While Chrysler’s average sale price was up 6 percent, it boosted discounts on the Ram pickup, its most popular model, by $593 compared with a year ago, according to data collected by J.D. Power and Associates.

The Ram discounts averaged just under $5,000. Ford and General Motors, its main competitors, offered around $4,000 per truck.

The Associated Press got the J.D. Power data from a person who asked not to be identified because the numbers aren’t typically released to the public.

 

 

Tags: sales, percent, automakers, discounts, million, according,


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