Small cars, like the Hyundai Elantra, gained significant ground in April.
It was a big month for the auto industry, though the emphasis was on small cars.
General Motors, Ford Motor Co. along with Hyundai/Kia all posted substantial sales gains during April, Audi meanwhile reporting its best April ever, even as industry giant Toyota continued to stumble.
General Motors sales increased 27% in April, while Ford Motor Co. reported a 16% increase and Chrysler Group sales climbed 22%. Hyundai reported a whopping 40% sales gain as it continued to woo buyers from other big Asian brands – pushing its market share to a solid 5.7% for the month, triple what it held less than five years ago.
All three domestic carmakers credited new models for their strong sales last month, primarily small cars like the new Chevrolet Cruze, which gained 180% over the old Chevy Cobalt. But there was still some strength left in large, luxury and muscle cars, like the Ford Mustang, which came on strong despite the run-up in fuel prices last month.
The improving car market is seen as a sign of an increasing healthy U.S. economy, though observers fret that if fuel prices get too high buyers might pull back in the months to come. That might also happen, according to analysts, if makers pull back even more on incentives. Overall, givebacks declined by about 4% in April, according to TrueCar.com, with some makers – notably Honda and Toyota – reducing their incentives by 17% or more.
Overall, the Seasonally Adjusted Annual (sales) Rate, or SAAR, topped 13.4 million units, up more than 40% from 2009, the industry’s worst year in decades. But analysts and industry officials warned that the Japanese parts shortage could cause problems in the months to come – Chrysler on Monday suggesting it could suffer a loss of up to 100,000 units of production this year.
“Both our retail car and truck sales were up significantly in April as we continued to build upon our sales growth momentum on the heels of a solid first quarter,” said Fred Diaz, President and CEO – Ram Truck Brand and Lead Executive for U.S. Sales.
Don Johnson, GM vice president, U.S. Sales Operations, said with gasoline averaging almost $4 per gallon, consumers are beginning to trade in larger vehicles for smaller, more fuel efficient ones.
“Recently, rising fuel prices have led many to re-think their vehicle choice,” Johnson said during a media conference call. “Because of the investments we’ve made in fuel-efficiency and global product architectures, the company is well positioned to meet these needs,” he said.
Consumer demand for Ford’s fuel-efficient vehicles continues to grow, with April sales increasing 16% versus a year ago and year-to-date sales up 16% – totaling 686,498 vehicles.
“With gasoline prices eclipsing $3.90 a gallon, consumers are placing an even higher priority on fuel efficiency in every size and kind of vehicle,” said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service. “Ford’s plan to lead in fuel efficiency is saving our customers money at the pump and helping us to profitably grow our business.”
Hyundai Motor America reported all-time record April sales of 61,754 units, up 40% compared with the same record-breaking period last year as it continues to poach customers away from Japanese brands.
For the year, the Korean maker’s total sales are up 31%, with retail volume rising 40%.
“April was another outstanding month for Hyundai,” said Dave Zuchowski, Hyundai Motor America’s executive vice president of national sales. “Our unwavering commitment as the industry leader in fuel efficiency with four vehicles achieving 40 MPG standard this year has helped overcome escalating fuel prices and drive our continued growth.
Other smaller Japanese brands, including Subaru, Mitsubishi, Suzuki and Mazda all reported strong sales increases during the month, despite having their Japanese assembly operations closed much of the prior month and cutbacks continuing into April. The real impact may not be apparent for some weeks to come, however Mike Jackson, CEO of AutoNation, recently warned that some brands could see dealer inventories drop by half in the months ahead.
That’s potentially good news for Detroit, European and Korean makers. “Hyundai is picking up the slack for Japanese automakers (and) came dangerously close to outselling Nissan this month,” noted Edmunds.com Senior Analyst Jessica Caldwell.
Meanwhile, the world’s largest automaker reported its sales dropped 2.4% in April and Toyota executives said that supplies of some vehicles, while adequate for now could, dip lower during the summer in the wake of the disruptions created by March 11 earthquake and tsunami that devastated the operations of many key suppliers.
Toyota also cut production in the U.S. to 30% of capacity until at least June 3 and to 50% in Japan, TMS vice president Bob Carter confirmed during a conference call. The maker recently cautioned that it could be as late as December before its production schedules are back to normal.
Nissan and Honda also face inventory constraints but said sales increased last month even as inventories declined.
“While our current dealer supply of vehicles remains adequate, we know that production constraints may start to affect sales into the summer months,” said Honda’s U.S. CEO John Mendel.
As TheDetroitBureau.com reported this week, Mendel has notified dealers that there will be a likely shortage of the all-new 2012 Civic model, which went on sale last month. Honda is also cutting back on imports of many Japanese-made models which, frustratingly, are among the company’s models in highest demand, including the Civic Hybrid and Insight and CR-Z hybrid models. The upcoming launch of an updated version of the Honda CR-V crossover, meanwhile, has been delayed.
Domestics and Koreans weren’t the only ones to have a good month. Among the Europeans, Porsche reported an 80% increase in sales, while Jaguar sales climbed 39%.
Volkswagen of America Inc., reported April was its best sales month in eight years. So far VW’s sales are up 17% for the year, VW officials noted.
“We are gaining traction in the U.S. market,” said Jonathan Browning, President and CEO, Volkswagen of America, Inc. “With our Jetta model continuing to lead the way, the numbers show our product line up is responding to consumers needs for performance, precision engineering and smart fuel economy,” he said.
VW’s luxury brand, Audi posted the maker’s best April ever. Still, its 10% gain was short of the market overall, raising questions as to whether the big boom in luxury cars may be peaking. BMW reported an 8.9% increase thanks to 67% increase by the Mini brand. Mercedes-Benz only posted modest gains of under 10%.
What’s to come in the months ahead?
Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, cautioned the next couple of months could hold some surprise for carmakers if consumers decided to hold off on purchasing new vehicles.
“As April’s sales pace confirms, increasing gas prices and shortages in vehicle inventory have yet to trump the overall recovery that has been progressing since the fall of 2010,” said Schuster. “However, looking at the remainder of the year, growing uncertainty in these two variables is increasing the risk that the industry may not reach the expected 13 million-unit level for total light-vehicle sales.”