Looking for some good economic news? Look no further than U.S. auto sales, which hit their fastest-selling pace in four years in February with a hearty 15.7% year-over-year gain.
Unseasonably spring-like weather and rising consumer confidence seem to have brought new-car buyers to dealers in droves, as nearly every manufacturer turned in solid -- in some cases, way more than solid -- gains over year-ago sales totals, despite a backdrop of rising gas prices.
But despite the big gains seen by most, one automaker seems to have been left out of the party.
What's up with the General?
In a month where Chrysler posted a stunning 40% surge and Ford (NYS: F) had a 14% gain on strong compact-car sales, General Motors (NYS: GM) only managed to eke out a 1% year-over-year increase. That sounds like bad news, but it was ahead of expectations. In truth, the reality is mixed:
Incentives were down. GM's spending on incentives, those "cash-back" or low-cost financing deals offered (and funded) by automakers, has long been among the highest in the business. Last year at this time, GM was offering big incentives on many models, which drove strong sales. But this year, the General's incentives were down 15% from year-ago spending totals, and arguably, the automaker did well to hold its sales ground.
Small-car sales were strong. The Chevy Cruze compact continued to post strong sales numbers, and the Chevy Sonic, the strong new replacement for the late, unlamented Aveo subcompact, more than doubled its predecessor's year-ago sales total. This follows a trend seen at Ford -- buyers are turning to smaller, fuel-efficient models. GM neglected that category for a long time, but its more recent emphasis on quality fuel-efficient options is paying off.
Sales outside of Chevy were weak. While Chevrolet sales were up 6%, and Chevy car sales were up 14%, sales of GM's other brands were weak. GMC truck sales were flat, and Buick and Cadillac both posted declines. Those results aren't entirely unexpected -- Cadillac in particular is in dire need of new products, which it will get later this year -- but they contributed to GM's lackluster overall total.
For GM watchers, the takeaway is mixed. The discipline around incentive spending is a good sign, but weak results outside of Chevy reinforce the message that GM's product line is still a hit-or-miss prospect, and for all of the General's recent progress, much remains to be done.
Recent new models like the Cruze and Sonic are selling well, but vehicles like the Cadillac CTS sedan -- very competitive when it was introduced, but now somewhat overdue for a refresh -- are falling behind while GM's product-development efforts struggle to catch up.
None of this came as a surprise. GM's stock was actually up on the sales news.
Meanwhile, Toyota's looking stronger
Elsewhere in the market, Toyota (NYS: TM) posted a strong month with sales up 12.3% over February 2011 -- the last month before the March tsunami that hindered Toyota's production lines for much of last year. With fuel efficiency a sales theme throughout the market, the longtime green leader was well-positioned to benefit: Prius sales were up more than 50%, and the all-new Yaris subcompact nearly doubled its predecessor's year-ago sales.
Not all was well for Toyota. Sales of its mainstay Corolla compact were down more than 14%, in part due to increased competition in the segment from Hyundai (OTC: HYMTF), Ford, and GM, as well as Honda (NYS: HMC) . And Toyota's truck and SUV sales were roughly flat. But its new Camry sedan continued to gain momentum, up almost 27% over the last-generation car's year-ago numbers, and sales of Lexus cars were strong.
Honda, which is still recovering from floods in Thailand late last year, posted a 7.8% sales increase led by surprisingly strong sales of its Civic compact. Civic sales were up 36% versus year-ago figures, with total sales that solidly outpaced the Corolla, its longtime rival. But Honda's other car lines saw sales declines, a surprise with gas prices rising given the brand's longtime reputation for fuel efficiency. Acura sales were roughly flat, with the brand's cars up a bit and its SUVs down.
The upshot: An economy on the mend?
So is this sales uptick a blip or a trend? It's looking more and more like a trend, as unemployment continues to fall, financing continues to pick up, and other signs of rising consumer confidence continue to manifest. To some extent, this sales surge was probably weather-driven -- sales of both the Chevy Camaro and Ford Mustang were up big, suggesting that some buyers might have had a bit of spring fever.
But with the annualized monthly sales rate, or SAAR, over 15 million for the first time since early in 2008, automakers and their shareholders have to be at least cautiously optimistic about the prospects for a good year in 2012. We'll see how this plays out in coming months.
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