February 2013 US Auto Sales: Consumers Shrugged At Sequestration; Dealers Optimistic Despite Budget Cut Headwinds
The top eight largest automakers in terms of U.S. sales sold more than 1 million cars in the U.S. last month as Americans brushed off concerns about federal government spending cuts and flocked to showrooms, enticed by low interest rates, modest jobs growth, a rebounding housing market and the desire to replace aging vehicles.
The Detroit Three -- General Motors, Ford and Chrysler -- sold 559,151 passenger cars and light trucks in February, with Ford and Chrysler saying they had the best February performance since before the 2008-2009 recession.
Meanwhile, Korea’s Hyundai says it broke an all-time February record, while German auto giant Volkswagen said U.S. sales for the first two months of 2013 haven’t been higher since 1974. Japan’s Honda sales declined slightly, and Nissan’s fell 6.6 percent. Toyota reported a modest increase of 4.3 percent.
All indications so far point to growth of about 1 million new car and light truck purchases this year.
American auto sales may climb to 15.1 million this year, according to an average of 18 estimates obtained by Bloomberg last month. Other estimates put that figure closer to 15.5 million. Southfield, Mich.-based automotive information provider Polk's current estimate is 15.4 million, up from last year’s 14.5 million. General Motors’ latest seasonally adjusted annualized rate estimate for total U.S. passenger car and light truck sales stands at 15.5 million vehicles, up from January’s 15.3 million.
Meeting earlier this month in Orlando, Fla., for the National Automobile Dealers Association Convention & Expo 2013, many of the nation’s auto vendors seemed upbeat.
“I talked specifically about sequestration with several multi-franchise dealers around the country. Even our members in the Washington area, which we know will be affected by any government cutbacks, are not concerned that the effect will be substantial,” Paul Taylor, chief economist for the NADA, said.
The overall economic effect of sequestration suggests that estimate GDP growth could decline by as much as 0.6 percentage points and threatens to put the country’s 2013 growth below an already lackluster 2 percent. The International Monetary Fund said this week the budget cuts could pull the country’s growth down by a half a percentage point, while Wells Fargo & Company (NYSE:WFC) estimates a 0.3 percentage point fall.
If GDP falls by three-tenths of a percent or six-tenths of a percent, it could put pressure on other retailers, like department stores and general merchandisers, but enticing auto-financing interest rates and many deals offering 0 percent financing will continue to entice buyers this year.
“Even though sales are growing by about 1 million a year on the new side, with the used cars on the road, the average is still getting older,” Taylor said. “We also have extremely low interest rates -- rates consumers old enough to remember when [Harry] Truman was president would recognize. That’s compelling for the car buyer.”
According to Polk’s most recent estimate, the average age of passenger cars and light trucks has risen to a record 11.3 years from the previous early 2012 estimate of 11.1 years. Part of that has to do with increased quality and dependability of vehicles in general, but part of it is that Americans also have been holding off on replacing their aged vehicles.
Here’s a rundown of how the eight largest auto companies (in terms of sales) fared last month in the U.S.:
Toyota Motor Sales, U.S.A., Inc.
The wholly owned subsidiary of Toyota Motor Corporation (TYO:7203) based in Torrance, Calif., said Friday it sold 166,377 units in the U.S. in February, up 4.3 percent. “Despite rising gas prices, severe winter storms and concerns about the federal budget, February was a good indication of the overall strength of the market,” said Bill Fay, group vice president and general manage for the division of the Japanese auto giant.
Honda North America, Inc.
The Torrance, Calif.-based subsidiary of Honda Motor Co Ltd (TYO:7267) reported a lackluster 2 percent decline in February sales of 107,987 total sales. Sales of the recently redesigned Accord, which grew 35.2 percent to 27,999 units, the 2013 Crosstour sedan-like crossover SUV, which saw sales rise 15.2 percent, and the Acura entry-level luxury compact crossover, which saw sales up 177.6 percent on relatively small volume of less than 3,000 units, were the major risers. Losers included the CR-V crossover, whose sales fell 16.5 percent to 20,668, and the Civic, which fell 16.1 percent to 22,713.
Volkswagen Group Of America Inc.
The subsidiary of German Volkswagen AG (ETR:VOW) has been on a winning streak for the past 30 consecutive months, and February was no different. The company said it sold 31,456 units in the U.S. in February, the best performance for that month since 1973.
Sales of the Passat four-door sedan made up 24 percent of all sales last month, and nearly a third of those were diesel. Volkswagen’s TDI clean diesel technology, which boasts hybrid-like mileage, accounted for 22.4 percent of the company’s U.S. sales in the second month of the year. Sales of the Tiguan compact crossover had a record February with 2,533 units sold.
"February's sales results and 30 consecutive months of growth reflects increasing consumer interest in our products," Jonathan Browning, president and CEO of Volkswagen’s U.S. operations, said.
Nissan North America Inc.
The subsidiary of the Japanese Nissan Motor Co. Ltd. (TYO:7201) said sales fell 6.6 percent year-over-year in February to 99,636 units. Infiniti luxury car deliveries declined 1 percent, while the Versa sub-compact was up 28.6 percent, setting a new February record of 13,100 units.
"We expect 2013 to be strong year for Nissan, in spite of the increasingly competitive market,” Al Castignetti, vice president the division, said.
Click the following links for the Detroit Three’s February 2013 U.S. auto sales results:
Chrysler LLC, a subsidiary of Italian company Fiat SpA (Milan:F)
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