DETROIT – Major automakers are on track to report February U.S. auto sales that are slightly better than analyst estimates as the growing strength in the U.S. housing market offset the risks posed to the broader economy by budget cuts.
The annual U.S. sales pace for the industry is on track to hit 15.3 million vehicles for February, RBC Capital Markets analyst Joseph Spak said in a research note. This surpasses the 15.1 million rate expected by economists polled by Thomson Reuters.
Pent-up demand for new cars and trucks also boosted U.S. auto sales, tempering the possible effect of the wave of U.S. federal spending cuts due to begin on Friday, executives from General Motors Co and Ford Motor Co said on Friday.
The across-the-board "sequestration" U.S. budget cuts would lop off about a half a percentage point from GDP growth if fully realized, Ford Chief Economist Ellen Hughes-Cromwick said.
"We have seen other elements in the economy offset some of the fiscal drag that has come through with some of the changes in terms of policy," Hughes-Cromwick said during a conference call with analysts and reporters.
Auto sales each month are an early indicator of economic health. February is expected to mark the fourth straight month of seasonally adjusted annualized sales above 15 million vehicles, for the first time since early 2008 - a sign of a sustained recovery after the recession.
GM's U.S. sales rose 7 percent in February. GM sold 224,314 cars and trucks last month, besting the 219,354 average analyst estimate calculated by Thomson Reuters.
Ford, the No. 2 U.S. automaker, saw February sales rise 9 percent to 195,822 cars and trucks, weaker than the 197,593 expected by analysts.
Pickup trucks were a bright spot for the industry during the month. GM, the largest U.S. automaker, reported a nearly 30 percent increase in sales of its Chevrolet Silverado trucks, while Ford's F-Series gained 15.3 percent.
"The recovery in new home construction is reinforcing the underlying improvement in auto buying conditions, especially for pickups," said Kurt McNeil, GM's head of U.S. sales operations.
VW SEES SALES IMPACT FROM SEQUESTER
But the head of Volkswagen AG's
"We do believe the debate on sequestration, uncertainty in terms of the global economic picture does have a drag in terms of confidence," he said. "We also see pretty intense competitive activity."
Like January, February is typically a slow sales month for the industry, so a small change in sales can have a large impact on the annual rate for the month.
Toyota Motor Corp <7203.T> said its U.S. sales rose 4.3 percent to 166,377 vehicles in February, worse than the 171,759 sales expected by several analysts.
Chrysler said U.S. sales rose 4.0 percent to 139,015 in February, slightly less than some analysts expected. VW posted a 2.9 percent increase to 31,456 vehicle sales. Chrysler is majority-owned by Italy's Fiat SpA .
U.S. auto industry sales rose 14 percent in January to an annual sales rate of 15.3 million - the third straight month above 15 million.
While the current pace was below pre-recession U.S. sales volume, it is much higher than the 10.4 million new vehicles sold in the United States in 2009. That year marked the lowest sales level since the early 1980s and pushed GM and Chrysler into bankruptcy.
U.S. auto sales in 2012 rose more than 13 percent to 14.5 million cars and trucks.
GM OUTLOOK BULLISH
GM predicted that the industry's U.S. sales rate would be 15.5 million for February, more optimistic than its rivals.
Ford said the February sales rate would be in the mid-15 million range, including medium and heavy trucks, which typically add 300,000 vehicles to the monthly sales rate.
Chrysler Group LLC, the smallest U.S. automaker, estimated the month will finish at 15.5 million, including medium and heavy trucks.
Chrysler said some Jeep sport utility vehicles have been in short supply, with the discontinuation of the Liberty last summer and the recent launch of the 2014 Grand Cherokee. CEO Sergio Marchionne previously said first-quarter volumes would be lower than the same period last year due to the new-vehicle launches.
"We expect to get our inventory gaps corrected over the next 90 days, resulting in additional products contributing to our growth," Chrysler U.S. sales chief Reid Bigland said.
A successor to the Liberty, the 2014 Jeep Cherokee, will be unveiled later this month at the New York Auto Show and will go on sale in May.
GM shares were up 0.9 percent at $27.39 at midday on Friday, and Ford shares were up 0.6 percent at $12.69.
(Additional reporting by Paul Lienert in Detroit; editing by Gerald E. McCormick and Matthew Lewis)