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Light vehicle sales in February 2012 escalated 15.7% to a seasonally adjusted annual rate (SAAR) of 15.1 million units, despite higher gasoline price (up 10% to $3.74 per gallon) and lower spending on discounts and promotions by automakers (down 4.7% to $2,457 per vehicle). In fact, the average price of vehicles went up by a robust $1,943 from February last year, according to TrueCar.com.
The SAAR during the month was the highest achieved by the U.S. auto industry since 2008. The tailwinds that led to improved sales include pent-up demand (where the average age of cars on U.S. roads is 10.8 years), easing unemployment and higher consumer confidence.
Although car buyers opted for small and less gas-guzzling models, they went after more optional features on them in order to save money on gas. As a result, the automakers could offset the lower profit margins for small cars relative to large trucks with the sale of optional features on the vehicles.
Sales by Automakers
Most of the automakers posted a double-digit rise in sales, except General Motors Co. (GM - Analyst Report). Let us take a closer look at the sales figures.
GM’s sales rose a tad 1% to 209,306 vehicles, driven by strong small car (such as Chevrolet Sonic) sales. The modest growth in sales was attributable to a strong comparable month last year owing to steep discounts offered by the automaker. Sales of Chevrolet Sonic subcompact had its best month with about 8,000 units while sales of GM’s most popular model, Chevy Silverado pickup, grew 2% to 32,000 units.
Ford Motor Co.'s (F - Analyst Report) sales increased 14% to 179,119 vehicles, driven by strong sales of Focus small cars. Focus had its best February in 12 years with a staggering 115% rise in sales to 23,350 units. Sales of the company’s popular F-series pickups went up 26% to 47,273 units.
Sales at Chrysler Group LLC – controlled by Italy’s Fiat SpA – surged 40% to 133,521 vehicles, driven by strong car sales that more than doubled from February last year. The namesake brand’s sales more than doubled driven by strong 200 and 300 sedan sales. Meanwhile, sales of the Dodge brand grew 27% and sales of the Jeep brand advanced 30%.
Toyota Motor Corp.’s (TM - Analyst Report) sales increased 12% to 159,423 vehicles driven by higher demand for fuel-efficient vehicles. Yaris subcompact car was the most popular model during the month with an 86% rise in sales to 3,611 units.
Honda Motor Co.'s (HMC - Analyst Report) sales scaled up 7.8% to 110,157 vehicles driven by strong sales of Civic cars and the CR-V sport-utility vehicles. Civic sales leapt 36% to 27,828 units while CR-V sales grew 24.5% to 24,759 units.
Nissan Motors Co. (NSANY) recorded sales growth of 15.5% to 106,731 vehicles led by strong sales of Altima midsize sedan (up 58% to 32,953 units). Nissan Division sales increased 17.1% to 97,492 units while sales of Infiniti vehicles inched up 1% to 9,239 units.
Daimler AG’s (DDAIF) Mercedes-Benz posted a 21.7% rise in sales to 19,679 vehicles led by strong sales of C-, E-, and M-Class model lines.
Volkswagen AG (VLKAY) sales soared 42.5% to 30,577 units, which is the company’s best February sales in the U.S. since 1973. Passat had its best month since August 2001 with 8,189 units of sales. The model has been recently named as the No.1 Family Car for 2012 by Kelley Blue Book's kbb.com.
Hyundai Motor Co. sales went up 17% to 51,151 vehicles during the month driven by strong sales of Sonata, Elantra and Accent. Sales of Sonata – Hyundai’s most popular vehicle in the U.S. – rose 11%, while sales of Elantra – the second most popular vehicle in the U.S. – grew 12% and that of Accent went up 29% on a year-over-year basis.
No doubt, the pace of sales in the U.S. auto industry is much more stable now, indicating an improvement in the broad fundamentals of the economy. Though the February sales rise is in no way an indicator of sustainable growth, strong pent-up demand will continue to revive the industry from recessionary lows. However, dealing with rising gasoline prices will remain a challenging task for the industry.