February auto sales may have surpassed expectations, but it’s too soon to declare a new trend. February’s seasonally adjusted annual rate (SAAR) is projected to exceed 15 million – the highest estimate in four years.
Total light vehicle sales were up 15% from last February, following an 11% year-over-year increase in January.
GM sold 209,306 units in February, the most of any company, with Ford close behind at 178,644. Chrysler continued its striking come back with a 40.4% increase over sales in February of 2011, according to an AutoData Corporation report.
Toyota and Honda saw gains of about 12% over last February, and Nissan finished close behind, selling a total of 106,731 vehicles.
Volkswagen, which has held a small but steadily increasing portion of the market share over the last six years, increased its sales by nearly 34%.
“Admittedly, these are very strong readings,” said Michael Brown, an economist for Wells Fargo LLC. Brown said he would like to see another two to three months of similar growth on top of January and February’s results before calling the numbers a new trend.
In a conference call Thursday morning, Don Johnson, U.S. vice president of sales operations for GM credited the company’s strong performance to improved economic conditions – including lower unemployment rates and better availability of credit.
Johnson said that fleet sales constituted about 25% of the company’s overall sales – a percentage GM will aim for throughout the year. He also said that higher gas prices were driving up demand for more fuel-efficient vehicles.
Ken Czubay, vice president of Ford echoed this theory on Ford’s Thursday morning conference call.
“Customers are recognizing Ford for investing in new vehicles that deliver top fuel economy,” Czubay said.
But it remains to be seen whether or not rising gas prices will motivate U.S. consumers to trade in their aging clunkers en masse.
“On the whole, the auto fleet is unusually old,” said William Cheney, Chief Economist at Manulife Asset Management. This phenomenon has created a backlog of demand for new vehicles, he said.
January’s low retail sale numbers for cars and auto parts told a different story. Buyers did not demonstrate a willingness to spend money on big-ticket items. If low retail auto sales continued through February, a number of these cars will sit on dealership lots, undermining a positive growth trend.
Data released by AutoNation, a major chain of dealerships showed an increase in sales, but the total amount sold was just under 20,000. With over 1.1 million vehicles sold by manufacturers last month, it will take more than fleet sales to get the inventory moving.
“[February] could just be a randomly good month,” Cheney said. But, he added, “It is good news. There’s no question about that.”