Ahead of the Bell: February US Auto Sales

AP News
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Posted: Mar 01, 2012 12:11 AM
Ahead of the Bell: February US Auto Sales

U.S. auto sales are expected to keep up their strong pace in February, as Americans snapped up small, fuel-efficient cars to offset higher gas prices.

Sales of new cars and trucks are expected to rise 3 percent from last February to nearly 1.1 million, according to LMC Automotive. The consulting firm raised its forecast for annual sales to 14 million from 13.8 million based on strong sales in the first two months of 2012. Sales totaled 12.8 million last year.

Automakers report February sales later Thursday. General Motors Co. is the only major automaker expected to report a sales decline for the month. GM inflated its sales last February with heavy discounts.

After hitting a 30-year low in 2009, sales have risen the last two years. And the auto industry sees several trends that could lift sales further. The average car on U.S. roads is now a record 10.8 years, so there is increasing need to replace older vehicles. Credit availability is improving, bringing more people back into the market. Japanese automakers have largely recovered from last year's earthquake and now have more cars to sell. And consumer confidence rose dramatically in February, making people more likely to consider a new car.

"There's a rising tide of excellent buying conditions right now that is really driving auto sales momentum," says Jessica Caldwell, a senior analyst at auto information site Edmunds.com. Caldwell says mild weather and the President's Day holiday also contributed to higher sales.

Gas prices _ which are up 45 cents since Jan. 1 and now average $3.73 a gallon _ are causing a pronounced shift to smaller cars. Erich Merkle, Ford's top U.S. sales analyst, says small cars made up around 19 percent of industry sales in December. That rose to 21 percent in January and is expected to rise to at least 24 percent in February, he says. Sales of the Ford Focus compact car have doubled since last year.

Cathy Anderson, the owner of two Ford Motor Co. dealers in the Huntsville, Ala., area, says her sales normally are dominated by F-series pickup trucks, but this month the top seller was the Focus.

"We're selling them faster than we can get them," she says.

Through early this week, Anderson sold 13 Focuses for the month, up 25 percent from February of last year. She's seeing people keep their older pickup trucks for hauling and towing, but buying Focuses to save money on routine daily driving.