DETROIT (WWJ) – High gas prices fueled March car sales to levels not seen since before “the great recession.” Most car companies reporting double digit sales increases in March, continuing a trend seen in January and February.
The industry overall saw sales up about nine percent, capping of a quarter that saw a 13 percent sales increase over 2011.
INTERVIEW: Edmunds.com senior analyst Jessica Caldwell talks about March car sales.
“It looks like the market is just opening up,” says Edmunds.com senior analyst Jessica Caldwell. “That’s what we’ve been waiting for. It’s not just people that have been not been effected by the recession, and people buying because they want to buy, but that other element of the market, that is perhaps pushed out of the used car market, because those prices are high.”
While many underlying economic conditions are improving, many in the auto industry feel that we’re seeing a joining of pent-up demand and high gas prices.
“I think folks are sitting across the kitchen table saying, ‘You know what, it might be a good time to trade in my vehicle, and get a vehicle that gets better gas mileage,” says Ford President of the Americas Mark Fields.
INTERVIEW: WWJ AutoBeat Reporter Jeff Gilbert talks with Ford’s Mark Fields.
Ford had its best March in four years, with sales up five per cent. GM sales were up 12 per cent. Chrysler sales up 34 percent.
“The combination of credit availability, an improving economy, pent-up demand and even high fuel prices encouraging people to acquire newer more fuel-efficient vehicles are all helping to drive industry sales,” said Reid Bigland, President and CEO – Dodge Brand and Head of U.S. Sales.
At GM, the story was at GMC and Chevy.
“For Chevrolet, every single one of their passenger cars was up year over year, which is a great story for that refreshed portfolio,” said GM sales operations manager Don Johnson. “Cruze is up 20 percent. Sonic delivered 8200 units, which was there best month ever.”
GM had already reported that in March it sold more than one hundred thousand vehicles with fuel economy topping thirty miles per gallon. Johnson says that fuel economy was on the top of most buyers’ minds.
“With fuel prices having risen the last little while, a lot of consumers are looking to trade in their lower fuel efficient vehicles and buy one of these new, very attractive, higher fuel efficiency vehicles.”
It was the best month ever for the Chevy Volt, with GM selling 2289 of the extended range electric vehicles. It’s also expected to be a record month for the Toyota Prius.
“Customers that really never looked at a Prius are walking in the door,” said Dennis Berrara, sales manager at Suburban Toyota. “It’s a new customer for us, looking for fuel economy.”
Among those customers was Land Rover owner Carmen Fliefel, who was looking at a Prius.
“I spend 80 dollars twice a week on the car I currently drive,” she said. I think it would be much better to have a car that’s fuel efficient and eco friendly.”
Many car buyers hadn’t been in the market for several years. There have been a lot of changes in those years.
“People with older cars, they come and they look at the new cars, not just from a fuel efficiency standpoint, but they look at the technology and the safety, and you know, they’re pretty dazzled out there,” said Jessica Caldwell of Edmunds.com.
Nissan and Hyundai posted record monthly sales. Nissan was up 12.5 percent, Hyundai 13 percent. Toyota sales were up 15 percent. Honda sales dropped five percent. But the company says it had a great March in 2011. Volkswagen, meanwhile, posted a 35 percent sales increase.
It wasn’t just a good month for small cars. Both Ford and GM reported strong pickup truck sales, indicating a possible recovery in the housing industry.
“That recovery is beginning to start, very gradual,” says Ford chief economist Ellen Hughes-Cromwick. “It does contribute the overall outlook for the economy, which does show some improvement.”
This wraps up a very strong first quarter. Analysts expect the rest of the year to be stronger than first expected, but maybe not quite as strong as we’ve been seeing.
Edmunds.com analyst Michelle Krebs says Chrysler, for example, will no longer have a relatively easy comparison with last year.
“This pace will grow more difficult for Chrysler to maintain as 2012 marches on,” she said. “Sales started to pick up steam last year around this time, so it will be hard for them to report these spectacular year-over-year gains from this point on.”
Ford plans to update its 2012 sales forecast on Wednesday. The analyst consensus has moved from expecting annual sales in the upper thirteen million range, to annual sales in the low to mid fourteen million range.
“We continue to believe that we’re going to see a steadily improving economy,” said GM’s Don Johnson. “You can already see that in the improved consumer sentiment, and intent to buy, continued adding jobs, and therefore some good, strong steady growth for the auto industry.”
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