Auto sales in the US gained 27 percent in February, as consumers found it difficult to turn down some deep dealer discounts. GM (NYSE: GM) had the largest gains and sold more than 207,000 vehicles during February, up 46 percent year-on-year. According to the industry tracking firm ‘Autodata,’ the sales rate for February was 13.4 million vehicles on an annualized basis. That was up from a sales rate near 12.6 million in December and January.
That would make it the highest rate since the government’s Cash for Clunkers rebate program in 2009, which was quite successful at increasing car sales. The good news for vehicle buyers is that discounts are likely to continue into the spring, as older models like the Toyota Corolla and Chevrolet Malibu duke it out with newer models like the Ford Focus and Hyundai Elantra.
Retail gas prices skyrocketed more than 20 cents a gallon in the last week over concerns that the strife in Libya could cut off that country’s oil exports and unrest was spreading to other countries in the Middle East. However, as oil reached over $100 barrel and gas pries skyrocketed, auto dealers are reporting record sales results.
Surprisingly incredibly high gas prices didn’t seem to matter to trucks and SUV sales. GM said sales of its full-size pickup trucks rose 65 percent compared with February of last year, a sign that businesses are continuing to replace work trucks. Sales of Chrysler’s Ram truck brand rose 81 percent.
Reasons for the increase in auto sales
There are several reasons for the impressive sales figures. One huge factor was deep dealer discounts. Dealers are making buyers offers they can’t refuse. To achieve this level of sales, GM significantly increased the amount it spends on advertising and incentives. Edmunds.com said GM spent an average $3,857 on incentives last month.
Other factors for the increase in sales include consumer confidence and financing. The economy is showing signs of recovery as more people are willing to take on more debt. Financing is getting more lenient and interest rates are incredibly low. Banks seem more willing to lend money again.
Another factor is an increase in a return of vehicle leases, which were almost absent in February of last year because used-car values dropped so dramatically during the downturn. GM said 22 percent of its individual buyers were leasing in February, up from 15 percent in January.
Which auto dealers are up and by how much
Ford said its sale were up 10 percent, the lowest gain of all the major auto manufacturers. Chrysler said its sales rose 13 percent on strong sales of Ram trucks and the new Jeep Grand Cherokee. Nissan Motor Co. said its sales were up 32 percent. The Rogue small crossover was up 86 percent. Honda Motor Co. said sales were up 22 percent. The CR-V crossover saw a 61 percent gain, while the Fit subcompact was up 44 percent.