The auto industry saw fantastic sales figure for the month of March, with several automakers hitting record-breaking numbers, while others enjoyed solid gains. March turned out to be the best month for auto sales in the last five years, with an average annualized rate of 15.6 million units.
Domestic players General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Chrysler posted record monthly sales since the auto market’s plunge in December 2007. Let’s take a look at the numbers in detail and figure out the reasons for such sharp gains, despite apprehension over the impact of Washington D.C. gridlock.
The ‘wow’ month
Several car manufacturers, including Ford Motor Company (NYSE:F) and Chrysler, posted their best month since 2007. In addition, foreign auto giants Nissan and Hyundai reported massive sales in the US market. As per Edmund.com, approximately 1.5 million new light vehicles were sold in the past month. The auto industry grew 6% in the first quarter of the year and is expected to surpass the economy’s recovery rate, according to Bob Carter, Senior VP of Toyota Motor Corporation (ADR) (NYSE:TM)’s US operations.
Honda Motor Co Ltd (ADR) (NYSE:HMC) experienced the highest sales growth that translated into a gain of 7.1%, which was mostly led by its revamped Accord. This new sedan saw a 36.4% rise in its deliveries for the month.
General Motors Company (NYSE:GM) came close behind with a 6.4% sales increase and sold 245,950 units. The growth was driven by an 11.6% rise in GMC sales, backed by retail and fleet sales, which grew 4% and 12%, respectively.
Kurt McNeil, the sales VP of GM’s US operations, gives credit to the recovering US economy and noted that sales of both light vehicles and trucks were seeing phenomenal growth.
The improving housing and construction sector is good news for GM’s local foe Ford, as well. Ford Motor Company (NYSE:F), like Detroit-mate General Motors Company (NYSE:GM), generated a sales gain of 6% for the month by selling 236,160 vehicles. The automaker could have done even better had it not faced issues with its Lincoln division.
The “Blue Oval’s” redesigned Fusion and Escape are selling in record numbers, which made both of the models post their best-ever monthly and quarterly sales. The company’s Explorer SUV sales jumped 33% from a year ago, while its F-series truck sales climbed 16%. Overall, the car maker experienced a solid month.
Chrysler is also enjoying the recovery of the pickup market as it witnessed huge demand for its Ram 1500 truck. Overall, the Detroit automaker experienced a 5% sales gain. Though its Ram Truck division experienced a 24% rise in sales, its Jeep sales were down 15%, which brought down the total growth for the month.
Top auto seller Toyota Motor Corporation (ADR) (NYSE:TM) continued its momentum with modest growth of 1% to 205,342 vehicles over prior year. The auto giant had experienced an abnormally strong March last year when it started recovering from the supply shortage after being hit by the 2011 Japan earthquake. Therefore, the car maker’s executives appear happy even with a marginal rise of 1% over last year’s fantastic figure. For Toyota’s Carter, ‘wow’ is the one-word description for the month.
German auto giant Volkswagen, which posted a 3.1% increase in car sales for the month, reported its best March in 40 years. Japanese automaker Nissan saw a marginal gain of only 1% to 137,726 units during the month, but that too was good enough for the automaker to record its top month ever in the US economy. This growth was led by its new Altima, backed by the sales of its electric model Nissan Leaf.
The auto industry is experiencing great momentum as it continues to draw buyers in huge numbers. So what is it that’s luring buyers to the showrooms?
What’s working in favor?
The improving job market and declining unemployment levels are boosting consumer confidence. People are willing to replace their aging vehicles with super exciting models as the quality and variety of cars have risen drastically.
Fusion, Accord, Camry, Escape, and Cadillac ATS are constantly luring buyers who have unleashed their strong pent-up demand. In addition, the tax refund checks, which on average amount to $3,000 this year, can also induce many to make a down payment for a car.
Moreover, the recovery of the housing and construction sectors has revitalized truck demand. Construction companies are replacing their old trucks with new ones as they are getting more and more business.