World Business

US auto sales rebound

By David Bailey and Bernie Woodall (China Daily)
Updated: 2010-04-03 10:34

The Toyota logo reflected in a Prius plug-in hybrid at the New York Auto Show now open to the public. [Agencies]

Detroit - US auto sales jumped to a seven-month high in March led by a 41 percent surge at Toyota Motor Corp after the Japanese automaker offered the steepest discounts in its history to win back sales lost during its recent safety crisis.

Overall, US auto sales jumped 24 percent in March, the best showing since August when the US government's "cash for clunkers" incentives caused sales to spike.

Boosted by consumer response to zero-percent financing offers and rebates on most of its lineup in March, Toyota snapped two months of sales declines driven by recalls and a production and sales halt in its largest market.

General Motors sales rose nearly 21 percent from a year earlier. Toyota was second in total sales, while Ford Motor Co ranked third after a nearly 40 percent sales increase.

US sales topped the 1 million vehicle mark in March, which was the strongest monthly result since September 2008 excluding last August.

The strength in the United States was also reflected in sales in Europe and Asia, as temporary government scrapping schemes boosted demand.

Despite the industry's rebound in March, sales remain sharply below recent highs. The US auto industry averaged a sales rate of more than 16 million units in the five years to 2008.

Nissan Motor Co's US sales rose 43 percent in March from the prior year, putting it ahead of Chrysler in terms of market share for the second time in three months.

Industry executives attributed the US sales rebound in part to incentives, pent-up demand from February when snow storms hit many areas and signs of broader economic stability.

The US sales increase contrasts with March 2009 when the industry was mired in a deep US sales downturn ahead of bankruptcies by GM and Chrysler.

Only Chrysler among the largest automakers posted a US sales decline in March. Chrysler said sales fell 8 percent in March from a year earlier and it planned incentives.

"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand," Edmunds.com analyst Jessica Caldwell said, adding that April would be a better indicator. Toyota traditionally has spurned deep discounts, but launched unprecedented incentives in March to try to win back customers, including zero-percent financing for five years on top-selling models such as the Camry sedan.

Don Esmond, Toyota US senior vice-president for sales, said on a conference call that incentives would be extended beyond April 5, but offered no specifics.

"We need a little bit of a kickstart to kind of get the market in our direction and we'll continue," Esmond said. "We're not going to walk away from our customers."

Incentives are closely watched by analysts because they are an indication of the pressure on automakers to move inventory by sacrificing profit margins.

Toyota's March incentives increased 46 percent from a year ago, to $2,310 per vehicle, according to industry watcher Autodata. GM's March incentives of $3,174 per vehicle were down 19 percent, and Ford's incentives of $3,035 were down 2 percent from March 2009, Autodata said.

Reuters