US auto industry off to a solid start in January

Filed under: Daily News |

Americans gave automakers a confidence boost in January. They bought more cars and trucks and showed a still-fragile industry that they were ready to replace their clunkers in 2011.

Sales were expected to total around 800,000 for the month. That’s still below pre-recession levels of 1 million or more, but better than last January’s sales of 698,000.

Nearly all big car companies reported double-digit gains for the month, a sign that the slow recovery in U.S. auto sales that began last year remains on track. While the recovery could falter if turmoil in the Middle East pushed up gas prices or unemployment stays high, the industry was happy with what it saw last month.

“January signals a good start to the year for us, for the industry, and we think it’s a good sign for the overall U.S. economy,” said Don Johnson, vice president of U.S. sales for General Motors Co.

Car buyers were shopping for just about everything. Sales of recently redesigned SUVS such as the Jeep Grand Cherokee and Ford Explorer were strong. People also snapped up small cars such as the Nissan Versa and Honda Fit.

Pickups remained strong, continuing a streak that began last year thanks to growing demand from construction crews and other small businesses. Ford F-Series sales rose 30 percent. Crossovers, which combine the roominess of SUVs with car-like handling, also remained strong. Sales of the Chevrolet Equinox, for example, rose 35 percent.

Last January, rental-car companies and other businesses fueled the recovery in auto sales as they began to restock their fleets after the recession. But last month, individual buyers propelled sales.

GM said its sales to individuals rose 36 percent, while its fleet sales fell 7 percent. Ford Motor Co. saw a similar trend.

Deals are helping move the metal. Car companies threw in more discounts in January, with incentives hitting an average of $2,576 per vehicle, said Jesse Toprak, vice president of industry analysis at car pricing site TrueCar.com. Toyota Motor Corp. and Honda Motor Co. increased their incentives by 40 percent.

The lowest interest rates in decades also spurred sales. Banks and finance companies have loosened up on credit in recent months, and people with good scores can get annual interest rates as low as 4 percent on car loans, said Paul Ballew, a former chief economist at GM who is now at insurance firm Nationwide. Plus, automakers are subsidizing loans so the rates fall even lower, cutting monthly payments.

“If you’re paying more than more than 2 to 3 percent on a loan, you’re probably not shopping hard enough,” Ballew said.

Fuel costs aren’t a major factor in what customers are buying, because people have adjusted to rising gas prices, Toprak said. Prices were hovering around $3.10 per gallon at the end of last month, 44 cents higher than a year earlier. But they could be a bigger factor for car buyers if they hit $4 a gallon. Toprak said that’s likely given recent unrest in Egypt and other parts of the Middle East.

GM and Chrysler Group LLC led the way in sales last month, each reporting 23 percent increases compared to last January.

GM’s Cadillac brand saw a 49-percent increase thanks to demand for the new CTS coupe, which went on sale last fall. GM also sold 321 sales of the Chevrolet Volt, an electric car with a backup gas engine. The only other electric car on the market, the Nissan Leaf, sold 87 for the month.

Toyota Motor Corp. recovered from January 2010, as sales rose 17 percent. Last January, it lost an estimated 20,000 sales after it recalled eight models because of defective gas pedals. Toyota struggled to regain customers all last year, but now says it’s keeping them – and stealing them from other brands.

Toyota truck sales rose 37 percent for the month, led by the RAV-4 small SUV. Car sales were up 15 percent. The Corolla compact and Prius gas-electric hybrid each rose more than 20 percent.

Ford sales rose 9 percent, partly because of a significant decrease in fleet and partly because of the discontinuation of the Mercury brand at the end of last year. Ford sold 248 Mercurys in January, 5,000 fewer than the same month a year earlier.

Other automakers reporting sales Tuesday:

- Honda Motor Co. said sales rose 13 percent. The CR-V was Honda’s top-selling model, with sales up 69 percent. Honda also increased its incentives by 45 percent, to $2,074 per vehicle, the biggest jump in the industry, according to Toprak.

- Nissan Motor Co. sales rose 15 percent on the strength of its Rogue crossover, which saw sales jump 72 percent.

- Kia Motors sales rose 26 percent, led by the Sorento, which blends the features of a car and an SUV, and the newly redesigned Optima sedan.