The recent runup in stocks combined with a perceived upturn in the US housing market seemingly spilled over to help spark new car sales by domestic automakers last month.
General Motors (GM) said its sales in March rose 6.4% from a year earlier, while Ford’s sales rose 5.7% and Chrysler posted a 5% rise, according to the Wall Street Journal, which said those gains reflected the companies’ best March performance in five years.1
Overall, annualized US sales grew 8.1% to a 15.3 million-vehicle pace, prompting auto information site Edmunds.com to boost its 2013 expectation of US car and light-truck sales to 15.5 million from 15 million, the Journal said. An Edmunds economist told the Journal that “wealth effects” from upticks in the stock and housing markets have “finally made Americans feel comfortable buying the new cars they’ve been waiting for.”
Upbeat news also was seen closer to the bottom of the totem pole. Tesla (TSLA) said earlier this week it expected to post its first-ever quarterly profit after saying sales of its new all-electric Model S has exceeded expectations.
The surge by American carmakers in March apparently came at the expense of their Japanese rivals. While Honda (HMC) saw sales rise 7.1% in March, the result was less than previously expected. Meanwhile, Toyota and Nissan posted sales gains of just 1%.
The That New Car Smell motif, a portfolio of stocks tied to the performance of new-car sales, is up 0.4% in 2013, and has risen 5.8% in the past 12 months.
One caveat to last month’s numbers, however: The Journal noted that demand last month was boosted by higher average sales incentives, were up 11% industrywide from a year earlier. Specifically, Chrysler lifted its incentives by 30% to an average of more than $3,200 to aid sales.
It remains to be seen, then, whether the uptrend from March can continue with fewer deals offered by carmakers – or whether consumer continue to demand them to sign on the dotted line.
1Jeff Bennett, “March US New Car Sales Jump,” The Wall Street Journal, April 2, 2013.