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U.S. auto sales burn rubber

Carmakers post their best March in years, helped by growing consumer confidence and demand for more fuel-efficient vehicles amid high gasoline prices.

April 03, 2012|By Jerry Hirsch, Los Angeles Times
  • Vehicle sales in March were 12.7% ahead of the same month last year. Above, car shopper Peter Tesche, left, is helped by salesman Marty Israel at Rick Case Plantation Hyundai in Plantation, Fla.
Vehicle sales in March were 12.7% ahead of the same month last year. Above,… (Joe Raedle, Getty Images )

Automakers posted the best monthly sales in almost five years, selling about 1.4 million vehicles in March as more confident consumers surged into showrooms looking to replace older vehicles and find more fuel-efficient ones.

The sales total was 12.7% ahead of the same month last year and amounted to an annual sales pace of 14.4 million vehicles, after seasonal adjustments, according to industry research firm Autodata Corp. The March total was the best since the industry sold 1.47 million vehicles in August 2007.

The results showed that a market that started to strengthen in September was continuing to pick up steam from an improving employment outlook and easier credit, industry executives said Tuesday.

It was buyers such as David Pool, a freelance advertising copy writer in Albuquerque, who were fueling the auto industry's expansion. Pool recently purchased a Toyota Prius v station wagon to replace a 2005 Toyota.

"The recession resulted in us holding on to our first Prius longer than we would have in the past with our other cars. We felt overdue," Pool said. "Our confidence in the economy is rising, probably along with everyone else's."

With the average age of the vehicles on the road approaching 11 years, this scenario is being repeated at dealerships across the country, said Lacey Plache, chief economist at auto information company Edmunds.com.

"We are seeing record numbers of very worn-out trade-ins," said David Conant, chief executive of Conant Auto Retail Group, which owns Acura, Ford, Honda, Hyundai, Infiniti, Lincoln and Toyota dealerships in Southern California. "This past Friday, we took 110 cars to the auction house."

Conant said the group of cars delivered to the auction averaged 227,000 miles and were too far gone for his group of dealers to sell.

The surge of buyers prompted auto analyst Jesse Toprak of auto information company TrueCar.com to raise his annual sales forecast to 14.5 million vehicles, which would make 2012 the best year since 2007, when Americans purchased 16.3 million vehicles.

Many automakers said March was their best month in years and some said it was their best ever.

Volkswagen sold 36,588 vehicles in March, a 34.6% increase over the same month a year earlier and VW's best March since 1973. Nissan North America's U.S. sales rose 12.5% to 136,317 vehicles, a record for any month in the company's history.

Kia Motors America's sale of 57,505 vehicles last month, a 30.2% gain, was its largest monthly total ever.

Hyundai Motor America, which sold a monthly record of 69,728 vehicles, a 12.7% jump, has an even bigger problem — a car shortage.

The company is "pretty much tapped out" of its two bestsellers, Elantra and Sonata sedans, from a factory in Montgomery, Ala., that already is running at full capacity, said John Krafcik, chief executive of Hyundai's U.S. sales arm.

It also will be hard to get more production of the Hyundai sport utility vehicles made in Georgia at a factory owned by Kia, its sister company. The inventory of Elantras is down to the single-day level, and Hyundai has just a 25-day supply of the Sonata.

Krafcik said he's negotiating with company officials in South Korea to get a bigger share of cars out of Hyundai's global factories to help meet U.S. demand. He expects robust sales to continue this year, helped by a better employment picture and easier credit.

"The industry feels really strong," Krafcik said. "There is a sense of increasing consumer confidence, and the number of automotive purchases that are in some fashion using home equity is starting to rise again."

Hyundai's sales are also benefiting from higher gas prices. The automaker said the average fuel economy of the vehicles it sold last month was 28.2 miles per gallon, which Hyundai said is the best in the industry.

Other automakers are seeing the same trend.

General Motors Co.said the percentage of vehicles it sold last month with four-cylinder engines reached 42%, its highest ever. GM also noted that more than 100,000 of its 231,052 vehicles sold last month achieved fuel economy of at least 30 mpg on the highway. Overall, GM's March sales rose 11.8%.

Helped by rising gas prices, sales of Toyota's Prius line of hybrid cars jumped more than 54% to almost 29,000 vehicles.Toyota Motor Corp.'s sales in March rose 15.4% to 203,282 vehicles.

Chrysler Group said its U.S. sales rose 34% last month to 163,381 vehicles compared with the same month last year.Ford Motor Co. logged its best March since 2007. Sales rose 5% to 222,884, Autodata said.

The only major automaker missing from the parade was AmericanHonda Motor Co.Its sales fell 5% to 126,999 from a year earlier. It was hurt by sagging demand for its flagship cars, the Accord and the Civic.

Growing auto sales are starting to push automakers to expand their U.S. operations.

Volkswagen Group of America announced plans last month to add 800 jobs at its factory in Chattanooga, Tenn., to increase production of its hot-selling Passat sedan.

Nissan said it would hire 1,000 workers at its plant near Nashville next year so that it could add a second shift to produce its new Infiniti JX35 SUV and a new Pathfinder SUV.

Toyota has said it will put $400 million into a factory in Princeton, Ind., where it will add 400 jobs next year to build more SUVs.

Total employees at U.S. auto plants could reach 650,000 this year, a 10% gain from 2011, according to the Center for Automotive Research in Ann Arbor, Mich.

jerry.hirsch@latimes.com

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