By Christina Rogers And Michael Calia
Fueled by low gasoline prices and easier credit, the U.S. auto
industry pulled its recent winning streak into 2015 with a
projected 15% monthly increase compared with the same period a year
ago.
January's volume suggests annual auto sales are tracking well
above the pace set last year. General Motors Co., Ford Motor Co.
and Fiat Chrysler Automobiles NV all notched year-over-year
increases in excess of 13%, and major Japanese auto makers had
similar gains in what is typically a slower month for sales.
"Consumers feel good because more people are working, the U.S.
economy is expanding and fuel prices are low, GM Sales Chief Kurt
McNeil said. GM, which reports earnings for its fourth quarter on
Wednesday, is riding the strong American car market to strong
earnings momentum, helping offset weakness abroad.
While January was hot, it was a bit weaker than the headline
numbers suggest due to one more selling day in 2015 than 2014. And,
the comparison to January 2014 was further aided by the storms and
cold spell that crippled large parts of the nation a year ago.
Overall results of U.S. auto sales for the month are still being
tallied and expected to be available later on Tuesday. The
annualized pace of sales is projected to have increased 8.4% during
the month, according to analysts at Morgan Stanley. If that rate
holds through the year, U.S. auto sales will exceed 17 million for
the first time in more than a decade.
The fundamentals of the industry remain strong, analysts and
auto executives said. Auto makers, helped by plant closures and
restructuring during the recession, are now in a far stronger
position to manage fluctuations in production demands.
Factory utilization, for instance, is at an all-time high,
according to data provider WardsAuto.com. This helps make factories
more profitable, and unsold-car inventories remain in check,
reducing the temptation to flood the market with vehicles no one
wants to buy and lessening the need for large-scale discounts.
Automotive information provider Kelley Blue Book said
transaction prices of new light vehicles are up 5% compared with a
year ago to $33,993, although they fell 1.7% from December. TrueCar
estimates average incentive spending, including rebates and
discounts, was $2,642 during the month. That is a decline of 10.4%
compared with December's numbers, but up 3.6% over January
2014.
Auto makers aren't the only companies cashing in. On Tuesday,
AutoNation Inc., the nation's largest auto retail chain, posted
record earnings of $1.02 a share in the fourth-quarter, beating
analysts' expectations by 11 cents.
Gas prices, sitting at about $2 gallon, are helping juice demand
for trucks and SUVs that consume more fuel but also deliver higher
margins. Some buyers are using savings from lower fuel costs to
purchase pricier options or come into the market sooner than
otherwise planned.
"Low fuel prices provide a significant boost to consumer
disposable income," Ford economist Emily Kolinski Morris said. She
noted low interest rates are also helping, and "are likely to
remain a prominent feature of the near-term outlook."
January's results reinforce the view that the domestic auto
industry is among the healthiest industrial pockets in the world.
GM, the market leader, reported a January increase of 18% and is
riding a tailwind provided from the recent redesign of its
full-size trucks and SUVs, including the Cadillac Escalade and
Chevrolet Silverado.
Ford said it posted its best January retail sales since 2004, a
13% increase from the year-ago period. Sales of the company's
F-series pickup truck grew about 17% during the month as it
continued to ramp up supplies of the redesigned truck.
Toyota Motor Corp., the third largest U.S. seller after GM and
Ford, said sales of its three brands rose 16% to 169,194 vehicles.
It said its light trucks, which include SUVs, rose 18.5% over a
year earlier.
Nissan Motor Co. recently launched new crossovers and SUVs that
has helped it overtake Honda Motor Co. for fifth place in the sales
pecking order, edging its Japanese rival out by sales of less than
2,000 vehicles last month. Its total sales were up 15% to 104,107
vehicles.
Hyundai Motor Co. said its U.S. sales were up 1% over a year ago
to 44,505 vehicles.
Fiat Chrysler, which along with GM was bailed out by taxpayers
in 2009, has been the fastest-growing car maker in America due to
demand for its Jeep SUVs and Ram pickup trucks. Its sales were up
14% to 145,007 last month.
Jeff Bennett contributed to this article.
Write to Michael Calia at michael.calia@wsj.com
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