By Christina Rogers And John D. Stoll
Fueled by low gasoline prices and easier credit, the U.S. auto
industry pulled its recent winning streak into 2015 with a nearly
14% January sales increase and over half of sales comprised of high
priced pickups and sport-utility vehicles.
The momentum, which includes a double-digit increase for each of
the Detroit Three car makers, compared with the same period a year
ago, continues the upturn's major trends: demand for trucks and
sport-utility vehicles are skyrocketing amid $2-per-gallon
gasoline, boosting transaction prices and margins at a time when
the rest of the global auto industry offers little profit
potential.
Those industry gains are coming at the expense of one of the
goals Washington had when it bailed out General Motors Co. and
Chrysler Group late last decade. Envisioning a much more
fuel-efficient auto industry, President Obama set a goal of 1
million electric vehicles on the road by 2015.
The market likely will fall well short of that goal despite tax
incentives and ample installed electric-vehicle capacity in
American automobile factories. Sales of light trucks and SUVs in
January grew 19.3%, representing 54% of the sales mix, according to
researcher Autodata Corp. Passenger cars grew at a more modest 7.7%
and, of those, electrified vehicles represented well under 1% of
sales.
"The American people love their trucks," said Mike Jackson,
chief executive of No. 1 U.S. dealer chain AutoNation Inc. "This
decline in gas prices is a definite plus for the industry both in
consumer attitude and the type of vehicles they buy."
GM, the largest U.S. auto maker, reported an 18% sales increase
in sales compared with the same period in 2014. The growth is
coming on the back of redesigned trucks and SUVs that made their
debut last summer just as oil prices were beginning to point
downward. GM pickup truck sales increased 43% last month and SUV
demand increased 36%.
Sales of the auto maker's Escalade luxury SUVs skyrocketed 171%
while its plug-in hybrid Chevrolet Volt, cited by President Obama
in 2011 as an example of where the industry needed to head, fell
41% over the same period.
Nissan Motor Co.'s Leaf electric car fell 14.5% and Tesla Motors
Inc.'s Model S are estimated to have been flat, according to
analysts who project the Silicon Valley auto maker's sales.
Ford Motor Co., meanwhile notched the highest January sales for
its F-series pickup trucks since 2004 despite supply limitations.
The Dearborn, Mich., auto maker post a 15.6% gain for the month.
Fiat Chrysler Automobiles NV's rugged Jeep brand sold 51,523
vehicles, more than Volkswagen AG's VW and Daimler AG's
Mercedes-Benz brands combined.
The shift supports the business model for many of the auto
makers doing business in the U.S. In most of the global auto
industry outside of China, making money remains difficult, forcing
many to continue relying on North America for a bulk of profits.
The strong dollar has helped importers, including Fuji Heavy
Industries Ltd.'s Subaru and BMW AG, earn fat margins on cars
imported from Europe and Asia.
All these sales are generating jobs at U.S. auto plants that are
humming at some of the highest capacity-utilization rates in the
history of the industry. Success of models like Ford's F-150 or
Jeep's Wrangler has prompted the hiring of tens of thousands of
auto workers at domestic factories since the last contract with the
United Auto Workers union was signed in 2011.
Chrysler on Tuesday said it would pay UAW workers $2,750 in
profit-sharing for 2014, the highest for the auto maker's
blue-collar employees in several years. Ford last week said it
would pay $6,900 in profit-sharing. GM will disclose its UAW payout
when it announces fourth-quarter earnings.
Toyota Motor Corp., the world's biggest auto maker by sales,
reports earnings on Wednesday against the backdrop of a steep
increase for its three U.S. brands, which rose 16% to 169,194
vehicles during the month.
"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's average transaction prices hit $34,800 a vehicle
in January, up $2,400 compared with year ago.
"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."
While January's industry tally was hot, it was a bit weaker than
the headline numbers suggest due to one more selling day this time
around. 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.
The annualized pace of sales increased 9% during the month,
according to Autodata. If seasonal factors remain the same over the
next 11 months, full-year sales would 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 WardsAuto.com, helped by recession-era plant closures
and restructurings. That high utilization keeps unsold-car
inventories 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 overall 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, up 3.6% over the same month
a year earlier.
Among other car makers, Nissan reported sales 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.
Auto makers aren't the only companies cashing in. On Tuesday,
AutoNation posted record earnings of $1.02 a share in the
fourth-quarter, beating analysts' expectations by 11 cents.
Full-year profits for the dealership chain rose 12% to $419 million
last year.
--Jeff Bennett contributed to this article.
Write to Christina Rogers at christina.rogers@wsj.com and John
D. Stoll at john.stoll@wsj.com
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