Auto sales are a widely watched economic indicator for several good reasons. Probably the most important is that new-car sales are a great indicator of consumer confidence: Households (and businesses) that aren't feeling good about their economic prospects don't buy new vehicles.
The trends in recent months suggest that consumers are feeling better about their prospects than they have in some time, and that's great news for the automakers. Sales have been rising steadily since late last year, hitting their fastest monthly pace in four years in February.
Early data suggests that the upward trend will continue in March. But not all of the automakers are seeing big gains -- in fact, some data suggests that Ford (NYS: F) may be losing ground.
Trouble for the Blue Oval?
Kelley Blue Book released an early look at March auto sales data on Thursday, and while there are several interesting trends visible in the numbers, the company's estimate for Ford was probably the most surprising.
According to Kelley, Ford is set to post a 6% year-over-year sales gain for the month. That sounds good in isolation, but it's significantly behind the 14.3% gain that the company predicts for the overall U.S. auto market. That translates to a loss of market share, which could become a problem for the Blue Oval if it continues.
Keeping in mind the (big) caveat that these are only predictions at this point, what could be happening? It could be as simple as this: Toyota (NYS: TM) and Honda (NYS: HMC) are regaining lost sales ground now that their production has been restored.
Both automakers lost significant ground in the U.S. market last year in the wake of the tsunami that destroyed important suppliers' factories in northern Japan, disrupting production of several key models. In Honda's case, flooding in Thailand late last year compounded the problem. But both automakers largely restored full production earlier this year, supplies of nearly all models are plentiful, and sales have been picking up.
Toyota, which has had a string of so-so products in recent years, also has a much-welcome hit product on its hands. Sales of the new Prius c -- despite its name, it's an all-new model -- have been extremely strong since the car was launched earlier this year. The Prius c is a small hybrid, rated at 53 miles per gallon, with a starting price under $20,000 -- a compelling offering in the current environment.
Sales of small cars in general have been quite strong as gas prices have risen in recent months, and Kelley expects that trend to continue. The company surveyed active car shoppers using its site for research and found that 51% are considering smaller vehicles, while 20% are considering "alternative-fuel" vehicles like hybrids, electrics, and diesels.
That consumer trend toward smaller cars has shown itself clearly in the market lately. Sales of Ford's Focus compact have been strong all year so far, and General Motors (NYS: GM) has -- for the first time ever, arguably -- solid, strong-selling entries in both the compact and subcompact segments with the Chevy Cruze and Sonic, respectively.
GM lost some sales ground last month, but Kelley sees an upturn happening for the General: The Blue Bookers' analysts see a big 24% year-over-year sales gain for the Detroit giant, enough to lift its market share into the 18% range.
That conflicts with a projection posted last week by Edmunds' Jeremy Anwyl, who sees GM's U.S. retail market share taking another hit in March. But it's possible that GM's making up some ground with fleet sales -- and also possible that the two organizations are getting different reads from different sources. Stay tuned.
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At the time thisarticle was published Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at@jrosevear.Motley Fool newsletter serviceshave recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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