(MCT) KANSAS CITY, Mo. — Most of the attention paid to the auto industry recently has revolved around Toyota’s problems with its vehicles.
But get this: Excluding last August’s frantic run on vehicles fueled by the Cash for Clunkers subsidy, sales at auto dealers nationwide have taken off at a pace not seen in a long time.
Even stranger, Toyota is a big reason for the boost, responding to its recall problems and the public’s focus on safety issues by kicking in a discount program that competitors have matched.
Edmunds.com, a popular car-buying Web site, found that in the first eight days of March, U.S. vehicle sales rose to a seasonally-adjusted, annual rate of 12.5 million vehicles.
Analysts don’t think sales will continue at quite that sizzling a pace. If it did, consumers would buy about 2 million more vehicles than they did last year, the industry’s worst sales year since the early 1980s.
Other factors besides the Toyota incentives are at work. The economy slowly continues to improve, and March is traditionally a big auto sales month.
Toyota began generating the excitement March 1, aggressively discounting most of its vehicles, and offering zero-percent financing and subsidized leases.
The move was a big change for the Japanese automaker. Because of its reputation for quality and reliability, it has historically maintained pricing discipline.
Competitors, including General Motors Corp. and Ford Motor Co., followed suit with zero-percent financing offers, as well as big cash rebates.
The March surge followed a good February, and some dealers said a momentum seemed to be developing that they had not seen in a long time.
Since the beginning of the year, Dick Smith Ford’s monthly sales have increased 30 to 45 percent compared with the same months in 2009.
“There’s a lot going on to bring people out right now,” said Mark Smith, president of the Raytown, Mo., dealership. “Incentives are up, and Ford has an inventory of fuel-efficient passenger cars that appeal to people who remember what happened to gas prices in 2008. We’re seeing many customers who have put off buying a new vehicle and feel like they’ve waited long enough.”
The recent weather warm-up also has played a part, dealers said.
“It feels like there’s some pent-up demand out there from people staying home all winter because of the cold and the snow,” said Carlos Ledezma, dealer principal at Cable-Dahmer Chevrolet in Independence, Mo., and Kansas City. But another dealer added that the early boost in March’s auto sales nationwide could be attributed to East Coast buyers, who put off their car shopping last month because of the unusually harsh conditions in that half of the country.
That is why dealers have tended to remain cautious. That 12.5 million annualized figure provided by Edmunds would still pale in comparison with 2007, when the industry sold more than 16 million vehicles.
“We don’t think it’ll stay at quite that level,” said Jessica Caldwell, a senior analyst with the Web site. “The rush of the early shoppers getting the incentives tends to die down as the month goes on. We think March will end up at an 11.3 million” annualized sales rate.
That figure, she added, would still surpass any month since September 2008, excluding last August’s government-subsidized car sale. The auto industry’s tailspin began in October 2008, when the financial markets collapsed and consumer financing dried up.
That led to that auto industry’s sales nadir in 2009, a year that included the government having to save GM and Chrysler from liquidation. Given how much sales plummeted last year, it shouldn’t be surprising that most automakers saw double-digit jumps in February compared with the same month a year ago.
February exceptions were Toyota, whose sales fell about 9 percent because of the recalls and temporary halt in new-car sales, and Chrysler, whose sales were flat and have continued to struggle since it emerged from bankruptcy.
Overall, industry sales last month rose 13 percent.
So it appears that auto sales to begin the year — despite weather conditions, Toyota’s problems, and an economy that still carries a nearly double-digit unemployment rate — are starting to get back on track. “I wouldn’t call it a rebound yet, but we’re beginning to see a slow, steady recovery,” said Caldwell of Edmunds.
