Automakers report stellar February sales
Momentum continues as discounts and an improving economy lure buyers to car dealerships, but high oil prices threaten future growth.
But this party may not last long. Spiking oil prices could hurt sales of larger vehicles, a scenario we saw in 2008 as gas climbed to $4 a gallon. The nationwide average is $3.38 a gallon -- up 9% in the last month. The average gas price for all of 2010 was $2.79.
And March could see automakers finally pull the deep discounts that lured many buyers to car dealerships.
For now, at least, U.S. automakers are enjoying a February that blew away analyst expectations. General Motors (GM) saw its sales soar 46% last month, beating the 36% increase analysts were looking for. Excluding fleet sales by car rental agencies and other bulk buyers, retail sales rose 70%, Reuters reports. But investors were not in a mood to celebrate, and GM shares fell by more than 1% in midday trading to $33.09.
Post continues after video:
GM relied heavily on discounts and other incentives to get those sales -- a strategy that backfired in the past by eroding profits. The company's sales chief says it will back off of those discounts starting this month, however.
"Our goal is very clearly to continue to have a very disciplined approach," he told reporters, Reuters reports. "Our incentive costs will start to moderate in March."
Analysts are expecting U.S. auto sales to show a 20% improvement in February, building on momentum established in the last year. GM reported a $4.7 billion profit for 2010 -- its largest in more than a decade.
Ford (F) said its sales rose 13.8% in February -- beating the 6.5% analysts expected -- and sales of its Ford brand in particular saw a 22% increase. The Lincoln brand didn't do so well, reporting an 11% drop in sales, according to The Detroit Free Press. Excluding fleet sales to large buyers, Ford said its consumer sales rose 23%.
The fastest-turning vehicle in Ford's showrooms was the new Explorer, which saw sales rise 268% over its predecessor, USA Today reports. Ford shares were down nearly 2% in midday trading to $14.79.
Ford, which reported a $6.6 billion profit for 2010, was recently named the most improved automaker of the year by Consumer Reports. But the magazine named three Japanese automakers as the top companies in the sector. Honda, Subaru and Toyota topped the list, with Volvo coming in fourth.
Chrysler saw a 13% sales bump in February, its 11th-straight month of year-over-year sales increases. Analysts only expected a 6.1% sales increase. The Jeep line saw an across-the-board increase, the company said, led by the 31% gain in the all-new Jeep Grand Cherokee.
The Chrysler 200, featured in one of the company's Super Bowl ads, saw a 203% sales increase from January as more units reached dealer showrooms. That car "was the center of attention" for the company in February, it said.
Foreign automakers also saw a warm reception in the U.S. in February. Toyota (TM) said U.S. sales rose almost 42% to nearly 142,000 vehicles, MarketWatch reports. The Toyota brand saw a 48.5% gain, while Lexus sales were nearly flat.
Nissan's North American division said it had the best February in its history, with a 32% increase in U.S. sales to slightly more than 92,000 units. The company's top-selling car, the Altima, saw a 29% jump in sales.
The gains were not as great at Daimler AG (DAI), which said its U.S. sales were up 5.3% in February. The company sold 16,176 Mercedes-Benz vehicles, a 5.1% increase from a year ago and the most sold for a February since 2008. The company sold 484 of its cute smartUSA cars, a 10% improvement from last February.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
3 stocks will be in the spotlight Thursday as investors try to make sense of the numbers from the sector.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.