Auto Sales Warm Up in April on Truck, SUV Demand

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Published May 01, 2014

| FOXBusiness

Auto sales picked up the pace in April, as drivers returned to showrooms looking for new trucks and sport-utility vehicles after a rough winter.

The auto industry has benefited from a rebound in the housing and energy sectors, in addition to low interest rates. Sales raced higher in 2013 but got off to a slow start this year amid record snowfall in many parts of the country.

Analysts expected the industry as a whole to report stronger sales for the latest month, given pent-up demand from consumers who put off buying a car until the spring. Car information provider Kelley Blue Book also said transaction prices for new vehicles ticked 1.2% higher to an average of $32,141.

According to Autodata, the seasonally adjusted annual rate (SAAR) for sales of light vehicles hit 16.04 million in April compared to 15.19 million a year earlier.

However, Ford (F) revealed a slight drop in April sales amid weaker demand for passenger cars. The nation’s No. 2 automaker sold 211,126 vehicles last month, down 0.7% compared to the same month a year earlier.

Kelley Blue Book was looking for a 0.9% decline in Ford sales. Edmunds.com anticipated a 4.6% increase.

John Felice, Ford’s vice president of U.S. marketing, sales and service, said the company saw considerable strength in F-series pickup trucks and its Explorer SUV.

“Overall, industry sales continued the rebound from January and February and are on a path of steady growth,” he added.

Ford sold a total of 63,387 F-series trucks last month, marking their best April since 2006. Truck demand and a 17% increase in Explorer sales helped offset weakness in car sales, as the namesake Ford brand recorded just a slight drop year-over-year.

The company’s Lincoln luxury brand posted a sales drop of 11%, with Ford citing a strong year-ago comparison. Lincoln sales are up 21% through the first fourth months of the year.

While Ford truck sales grew 8% overall, car sales fell 9.1% on weaker demand for the Fiesta, Focus and Fusion.

That trend was seen across much of the industry last month. Jack Nerad, executive editorial director and senior analyst for Kelley Blue Book, said American automakers have made significant inroads to improve their car portfolios, but a winter full of snowstorms likely made trucks and SUVs “look a lot more appealing” to buyers.

Ford said retail sales, or vehicles sold to consumers, checked in at 141,950 units, off about 1% versus April 2013. The latest month had 26 selling days, one more than last year.

Also on Thursday, Dearborn, Mich.-based Ford announced chief operating officer Mark Fields will succeed Alan Mulally, who plans to retire on July 1, as president and CEO. The transition will occur earlier than expected. Mulally previously said he would remain in his current roles until at least the end of 2014.

Shares of Ford fell 1.4% to $15.93 in recent trading.

General Motors (GM), the largest of the Big Three automakers, reported a 6.9% increase in its April sales on strong demand for the company’s new pickup trucks.

GM sold 254,076 new vehicles in April, beating estimates from both Kelley Blue Book and Edmunds. Chevrolet sales rose 5.3%, while GMC was up 13%. Sales grew 12% and 5.1% for Buick and Cadillac, respectively.

The redesigned Chevrolet Silverado and GMC Sierra performed well during the month, and GM stressed that transaction prices held steady. The company has said it will continue to control incentives for its new trucks, sacrificing higher sales figures in exchange for wider margins.

Sales of the Silverado jumped 8.5% to 42,755. GM delivered 17,246 Sierra pickups, a 21.4% gain.

GM also said it expects to gain between two and three points of retail market share in the large pickup segment compared to March 2014.

The company’s overall retail sales improved 8%, while fleet sales were up 5%.

“Retail demand was steady in April, and truck sales and transaction prices were especially strong,” said Kurt McNeil, U.S. vice president of sales operations at GM. “As we expected, the economy continues to strengthen.”

GM’s results seemingly indicate that consumers are unfazed by its ignition-switch recall and several others this year. The company has come under scrutiny for a years-long delay in recalling about 2.6 million vehicles worldwide to fix defective ignition switches, a problem that has been linked to 13 deaths.

Nerad said the sales figures and Kelley Blue Book’s market research indicates the recall isn’t affecting car shoppers.

“We thought that from the beginning. We didn’t think this would have the impact that Toyota’s sudden-acceleration problems had on its sales,” Nerad said, noting how the cars included in GM’s ignition-switch recall are all defunct models.

GM shares raced 1.3% higher to $34.94 on the April sales report.

Chrysler Group outpaced its U.S. rivals with a 14% increase in April sales, as the automaker continues to benefit from sales of Ram trucks and the recently launched Jeep Cherokee.

The company recorded sales of 178,652 vehicles, thanks to truck sales that soared 34%. Car sales tumbled 26%.

Chrysler topped a projection from Edmunds for 12.3% growth year-over-year. Kelley Blue Book anticipated a higher gain of 18.1%.

Strong demand for Jeep and Ram vehicles again lifted Chrysler’s monthly sales report. The Jeep brand posted a 52% increase in sales, with sales of the Cherokee hitting 15,007 units. The SUV’s launch was delayed last year but began arriving at dealers in late October.

The Ram Truck brand saw sales climb 22%. Chrysler said 36,674 pickups were delivered last month. The namesake Chrysler brand suffered a 21% decline in sales, while Dodge sales were flat. The company also saw a 10% increase in Fiat sales.

Chrysler is in the process of completing its merger with Italian automaker Fiat. The combination into Fiat Chrysler Automobiles is expected to be done by the end of the year. CEO Sergio Marchionne said the new company could begin trading in New York by Oct. 1.

Toyota’s (TM) April sales jumped 13.3% to 199,660 vehicles, as sales of the Tundra pickup truck jumped 24%. Lexus saw a 23.1% improvement in April sales volume, while the Toyota division recorded 11.7% growth.

U.S. shares of Toyota rallied 1.4% to $109.80.

Honda (HMC) reported sales of 132,456 units, or 1.1% more than the year-ago month. The Acura luxury brand outpaced Honda with a gain of 1.6% on strong demand for light trucks. The company’s namesake vehicles posted a 1.1% sales increase.

“After a few truly chilling winter months, it’s great to see the warmer spring weather begin to liberate our customers and spark record sales of CR-V and solid sales results across the lineup,” said Jeff Conrad, the Honda division’s senior vice president and general manager.

Honda shares were up 1.2% at $33.69 on Thursday afternoon.

Nissan Group, which includes the Infiniti luxury brand, said its monthly sales flew 18.3% higher to 103,934.

Fellow Japanese manufacturer Hyundai Motor sold 119,783 vehicles in the U.S., up 8% year-over-year, amid a 12.9% increase in sales for its Kia brand. The results beat estimates.

Sales of Volkswagen and Audi vehicles fell about 0.7% to a combined 46,484, missing expectations.

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