By Reuters
Filed under: General Motors, Transportation, Automotive Industry, Ford, Manufacturing, Auto Loans
By Ben Klayman and Deepa Seetharaman
DETROIT — U.S. sales of sport-utility vehicles and pickup trucks jumped in March, spurred by rising home prices and an increase in housing construction, major automakers said on Tuesday.
The performance of SUVs and trucks outpaced gains in the broader U.S. auto market, but March is still expected to be the fifth straight month that the auto industry’s annual sales pace will be above 15 million vehicles.
General Motors Co. (GM) said the stronger housing market helped its sales to small businesses climb by nearly a third. The largest U.S. automaker also posted a 31 percent sales gain in crossovers vehicles, such as the Chevrolet Traverse, while its overall sales were up 6.4 percent.
Ford Motor Co. (F), the No. 2 U.S. automaker, posted a 16.3 percent rise in sales of its F-Series pickup trucks and a 15.4 percent spike in sales of SUVs, such as the Escape.
“The housing sector recovery is in full swing,” Ford economist Jenny Lin told reporters and analysts.
The U.S. housing sector is starting to contribute to growth after years of dragging down the broader economy. Rising home values are helping U.S. consumers feel more confident about buying a new vehicle, GM and Ford executives said.
Home prices in 20 metropolitan areas rose 8.1 percent in January from a year earlier, the biggest 12-month rise since June 2006. Meanwhile, U.S. home builders are breaking ground on more new houses this year, boosting sales of pickup trucks.
In about a month, GM will launch two new truck models, the 2014 Chevrolet Silverado and GMC Sierra. Ford is planning an overhaul of its F-150 next year.
Executives said pent-up demand also continued to fuel sales gains in March. The average age of vehicles on U.S. roads is more than 11 years, an all-time high, and many consumers can no longer put off buying a replacement.
“The economic picture looks pretty similar to the last couple of months, which helps explain why the industry has stayed in a relatively healthy range,” Kurt McNeil, head of GM‘s U.S. sales operations, said during a conference call.
“Business spending has picked up and pent-up demand for vehicles is offsetting any drag from tax or federal spending issues,” he added.
Ford Beats, GM Misses
Auto sales each month are an early indicator of economic health. The auto industry is in the midst of its fourth year of recovery from an economic downturn that pushed GM and Chrysler into bankruptcy in 2009.
Analysts polled by Thomson Reuters were expecting an annual sales rate of 15.3 million vehicles in March. GM estimated the rate would come in around 15.2 million.
GM‘s results fell short of the estimates of at least three …read more
Source: FULL ARTICLE at DailyFinance