Business, Economics and Jobs

Auto sales in March: Detroit roars again


A Ford Focus on the assembly line at Ford Motor Co.'s Michigan Assembly Plant December 14, 2011 in Wayne, Michigan.


Bill Pugliano

Two weeks ago at the Society of Business Editors and Writers annual conference in Indianapolis, I heard Ford's marketing chief James Farley say something interesting.

When it comes to sales in the US, "Fuel economy and perception of fuel economy is key," Farley said.

The latest auto sales numbers are clearly backing up that statement.

Both Ford and Chrysler report that sales in March rose to their highest level in at least four years.

General Motors, too, saw a big jump last month.

This renewed strength from Detroit comes as gas prices in the US approach the $4 per gallon price, or up nearly 10 percent from a year ago.

First, the numbers:

Chrysler sales surged 35 percent in March. (Overall, Chrysler is having its best first quarter since 1973, six years before the legendary Lee Iacocca joined the company.)

Ford sales rose 5 percent last month.

General Motors, meanwhile, saw a 12 percent jump in sales led by — you guessed it — fuel-efficient vehicles.

“The economic recovery and a deep bench of fuel-efficient cars and crossovers have been driving our sales for more than a year, but the combined impact has never been stronger than it was in March,” GM's vice president of US sales operations Don Johnson said in a statement.

This isn't a Detroit-only phenomenon.

Hyundai, Nissan and Volkswagen all posted record sales gains in March.

So, yes, bad news at the gas pump is good news for the auto companies that can capitalize on these changing economic conditions by having the right products at the right time.

But there's another key economic force at play here: pent-up demand.

“After delaying purchases over the last couple of years, consumers are eager to jump into the new car market,” Jessica Caldwell, senior analyst with the automotive research firm said in the New York Times.  “Vehicle trade-in rates have achieved sustained highs in recent months, which suggests that consumers have decided that they’ve held on to their cars for too long."

The industry overall is expected to sell more than 14 million vehicles this year in the US, versus 12.8 million in 2011, and 11.6 million in 2010.