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Auto Industry Gaining Speed

May 2, 2012

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Great economic news heading into the summer, as reported by MSNBC’s Bottom Line. A number of top automotive companies are seeing high or record sales, according to April’s automotive reports, and the remainder of 2012 is looking stronger overall.

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It’s Official: Auto Industry Firing On All Cylinders

By Paul A. Eisenstein, msnbc.com contributor

It’s hard to say whether there’s a direct link between the strong surge in April car sales and the four-year high the Dow Jones industrial average is on track to set today, but both are clearly delivering a dose of much-needed news about an uncertain economic recovery.

With the last few automakers finally reporting, the industry appeared to continue gaining momentum despite worries about fuel prices and other economic issues. General Motors boosted its forecast for all of 2012 by a full 500,000 vehicles, to somewhere between 14 million and 14.5 million.

That’s despite the fact that both GM and Ford posted modest declines for April — as did Asian rival Nissan — but the slowdown in sales that some feared after the unusual warm winter clearly didn’t materialize.  And a number of makers, including Audi and Volkswagen, are today bragging about setting records. VW sales were their best in 40 years, Audi their best ever for the month.

“It’s good to see the market is still growing,” said David Sullivan, an auto analyst with AutoPacific, Inc.  What surprised Sullivan — and many other analysts — was the fact that while demand was up for small, high-mileage vehicles, American motorists also plunked their money down on many of the bigger pickups that were supposedly going out of style.

Related: Chrysler sales jump; Ford, GM dip slightly

Nissan, for example, set new April sales records for both its small Rogue crossover and subcompact Versa models.  But demand, the maker said, was also up for the full-size Titan pickup as well as the big Quest minivan.

Also noteworthy was the fact that the industry, on the whole, maintained its momentum without having to ramp up incentives.  Quite the contrary.  OVerall, manufacturers trimmed rebates and other givebacks by an average 4.7 percent compared to March of this year, or about $120 a vehicle — with the average car, truck or crossover sold in April 2012 carrying incentives of $2,446, according to data collected by research firm TrueCar.com.

There were a few exceptions, notably Honda ramped up spending by 8 percent for the month, to $2,398 per vehicle, while Toyota increased its givebacks 4.4 percent, to $1,823, said TrueCar.

“Incentives continued to decline for most automakers with the exception of Honda and Toyota as both are vying for recapturing their lost market share from last year,” said Jesse Toprak, TrueCar’s director of industry trends and insights. “Ford is now spending less on incentives as a percentage of their average transaction price then Honda.”

The spending did appear to pay off, however, with Toyota sales increasing 11.6 percent for the month while Honda’s rose 9.2 percent to April 2011. The incentives helped the smaller maker breathe some life back into its fading Accord line.  Long one of the nation’s top-sellers, that midsized sedan took an embarrassing slip in recent months, falling behind the Nissan Altima.  Accord was up 41 percent for the month, handily outpacing the Altima.

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READ FULL ARTICLE ON MSNBC

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