suntimes
THORNY 
Weather Updates

Hot cars: January sales top past 5 years

Chevy trucks line lot dealer Murrysville Pa. Ford Chrysler General Motors all reported double-digit gains for January. | AP Pho~

Chevy trucks line the lot of a dealer in Murrysville, Pa. Ford, Chrysler and General Motors all reported double-digit gains for January. | AP Photo ~ Gene J. Puskar

storyidforme: 43979707
tmspicid: 16281501
fileheaderid: 7320281

Updated: February 8, 2013 1:02PM




DETROIT (AP) - American consumers ignored tax increases and trudged through winter weather to buy new cars and trucks at an unusually strong pace last month.

"(January) was like a sprinter out of the starting blocks," said Mike Jackson, CEO of AutoNation Inc., the country's largest auto dealership chain.

Analysts said it will likely be the best January in five years once all automakers report sales. Toyota posted a 27-percent increase, while Ford sales jumped 22 percent. GM and Chrysler each reported 16 percent gains compared with a year earlier.

The results left the industry optimistic about the new year. Businesses bought more trucks. Consumers are ready to buy - their cars have reached a record average of 11.3 years old - and banks are making it easier with low interest rates and looser credit terms.

The stock market may also have inspired car buyers. The Standard & Poor's 500 index had its strongest January since 1997, and new-car purchases tend to rise or fall with the market. Also, employers have been hiring at a steady - if not spectacular - pace.

"We're in a fundamentally sound trajectory," said Mustafa Mohatarem, chief economist for GM. He said the recovery from the Great Recession in 2008 is still modest, but "those recoveries tend to be much more sustainable."

Whatever the incentive, people didn't let chilly weather, or the heavier hand of the U.S. Treasury, stop them from car shopping.

Chrysler estimated that total U.S. industry sales hit an annual rate of 15.5 million in January. If that holds for the rest of the year, automakers will sell 1 million more vehicles than in 2012, when sales rose 13 percent.

The strong January numbers came even though higher taxes reduced take-home pay for most Americans. Taxes rose after a 2-percent reduction in Social Security taxes that was in place for two years expired Jan. 1.

January sales might have been even higher without the tax increase, said Jesse Toprak, vice president of industry analysts at the car pricing site TrueCar.com. He said the increase is costing the average new car buyer - those with a household income between $70,000 and $100,000 per year - around $300 per month.

"That's almost a car payment," he said.

Analyst forecasts for 2013 are in the 15 million to 15.5 million range. Although still far from the peak of about 17 million in 2005, the industry could sell a whopping 5 million more cars and trucks than it did in 2009, the worst year in three decades.

Toyota sales jumped on the strength of the Prius hybrid cars and wagon, which rose 36 percent, and the new Avalon sedan, which was up 50 percent. The luxury Lexus brand climbed 32 percent on strong sales of the new ES and GS sedans.

At Ford, January's sales growth was led by the newly redesigned Fusion midsize car, which saw a 65 percent increase. Explorer SUV sales rose 46 percent.

Ford's luxury Lincoln brand fell 18 percent. Lincoln's new MKZ sedan, which is featured in a Super Bowl ad, is going on sale now, but could be tough for buyers to find. Ford's U.S. sales chief Ken Czubay said the new Lincolns are undergoing extra quality checks that will delay shipments through April.

Sales of the F-Series pickup truck, the top-selling vehicle in the U.S., rose 22 percent. GM's Chevrolet Silverado and GMC Sierra pickups each saw increases of over 30 percent while sales of the Ram pickup, Chrysler's top-selling vehicle, rose 14 percent from a year earlier. Those gains give a strong indication that businesses are replacing aging pickup trucks that they kept through the Great Recession.

Kurt McNeil, GM's vice president of sales operations, said the company noticed a 37 percent increase in sales to small businesses like building contractors, who normally buy pickup trucks.

Analysts say sales for the month should exceed 1 million vehicles and are likely to be 8 percent to 15 percent higher than a year earlier.

Jackson, whose chain reported record fourth-quarter earnings on Thursday, feared a hangover last month from the strong finish to 2012. But he said people who focused on paying down debt the past few years are now making big-ticket purchases at a robust pace.

Consumers are saying: "I'm moving ahead with my life. I'm getting a new vehicle," Jackson said.

Buyers crowded dealerships even though incentives weren't as good as last year. The auto industry spent 8 percent less on discounts last month than it did a year earlier, according to TrueCar.com. Of all major automakers, only Hyundai and Volkswagen raised incentives from what they spent in January of 2012, TrueCar said.

But that could change later in the year as automakers are expected to compete for sales with new vehicles and better deals.

Other automakers reporting sales Friday:

- Honda's sales rose 12.8 percent. A 75-percent increase in sales of the new Accord helped offset weaker sales of the CR-V and Civic.

- Nissan's sales rose 2 percent. Sales of the newly redesigned Pathfinder SUV, which went on sale in November, more than tripled over last January. The new Sentra also saw big sales gains.

- Hyundai's sales rose 2 percent, with a 24 percent increase in Elantra small car sales helping outweigh an 8 percent decline for the midsize Sonata. Hyundai said it was a record January for its U.S. sales.

- Volkswagen's sales grew 7 percent. That was slower than the company's 31-percent sales growth last January, but it was still the company's best January in the U.S. since 1974. Passat midsize sedan sales rose 40 percent.

Copyright 2013 The Associated Press.



© 2014 Sun-Times Media, LLC. All rights reserved. This material may not be copied or distributed without permission. For more information about reprints and permissions, visit www.suntimesreprints.com. To order a reprint of this article, click here.