Auto Sales Spring Ahead -- WSJ

By Anne Steele

U.S. new car and light-truck sales returned to the fast lane in April, setting a monthly high that bodes well for Detroit auto makers aiming for record 2016 profits.

Industry volume hit 1.5 million vehicles last month, a 3.6% increase from a year earlier, according to data provider Autodata Corp., for a seasonally adjusted annualized pace of 17.4 million vehicles that puts auto makers on track for a second consecutive annual sales record.

The U.S. isn't the only auto market on an upswing. European sales have been steadily rising for a few years and many of the markets in the Asia-Pacific region are growing, although at a more tepid pace than earlier this decade. Through March, U.S. light-vehicle growth appeared to be cooling off, with auto makers notching a disappointing 16.6 million annual pace for March.

April's rebound bodes well for many of the world's auto makers who bank on the U.S. as the most profitable market in the world. Margins are slim to nonexistent in Europe and earnings in China, while relatively strong, are split with joint venture partners.

The Detroit Three earned $6.8 billion in combined operating profit from North America in the first quarter, or 86% of total global operating profit for the group during the period. Japanese auto makers, which also reap a sizable share of profits from U.S. operations -- report quarterly results in May.

Auto makers say low fuel prices, favorable credit conditions and a strengthening economy continue to bring buyers into dealerships. "The U.S. economy continues to grow despite some mixed data," Ford Motor Co. senior economist Bryan Bezold said during a conference call.

Fleet sales to rental-car companies, government buyers or corporate accounts drove much of the gains through March. Analysts said April retail sales to individual buyers held steady meanwhile.

With gas prices hovering at about $2 a gallon on average nationwide, customers continued to snap up pricier trucks and sport-utility vehicles with sales of those models to climbing 11% in April, according to Autodata. Passenger-car sales, meanwhile, fell 5% as more shoppers gravitate to roomier vehicles.

Ford, like its domestic rivals, is disproportionately benefiting from that shift. The company delivered more than 70,000 F-series pickups -- its most profitable model -- for the second month in a row, and sold the most SUVs in its history.

Car makers benefited from an extra selling day in April, as well as the Easter holiday falling in March, giving them five full weekends of sales. Typically, new-car sales start to pick up in the spring when there is better weather and longer days.

Those trends led to a $1,500 bump in transaction prices, nearly double the industry average in April, the company said. Ford's sales increased 3.6% to 229,739 light vehicles, while Fiat Chrysler Automobiles NV volume rose 5.6% on the strength of the Jeep brand.

General Motors Co. was the only high-volume seller to report an April decline, its third-consecutive monthly slide in market share. It has blamed sluggish results in 2016 on a planned reduction in fleet sales, and said deliveries are growing among retail buyers.

Ford and Fiat Chrysler reported strong North American margin growth in the first quarter, a period during which both companies laid out plans to shift more investment into U.S. truck and SUV production.

Toyota Motor Corp.'s sales rose 3.8% as the Japanese auto maker posted its sixth consecutive month of record light truck sales, led by the Highlander, RAV4 and 4Runner. Nissan Motor Co. reported a 13% gain in sales to 123,861 vehicles for an April record. Honda Motor Co. also logged a sales record, with 14% growth to 148,829 vehicles sold.

Among the German luxury car makers, Daimler AG's Mercedes-Benz brand led the market with sales up slightly 29,236. BMW AG said its namesake brand sales fell 7.4% over a year earlier to 24,951 during what it called a "volatile" month due to model changeover. Volkswagen AG's Audi said its sales rose 5.8%.

Volkswagen brand sales skidded 9.7% on continuing fallout from the auto maker's diesel-emissions scandal.

Christina Rogers contributed to this article.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

May 04, 2016 02:48 ET (06:48 GMT)

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