From Autonews....
Buyers reacted to early-month deals, then ardor cooled
Jesse Snyder
Automotive News -- April 5, 2010 - 12:01 am ET
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ENLARGE
Incentives helped make the Toyota Camry the top-selling U.S. car in March. Toyota sold 36,251 Camrys, more than in January and February combined.
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The first two weeks of March were great. Fueled by incentives, U.S. light-vehicle sales rose 24 percent for the month from a year earlier to 1,066,339 units.
But the pace faltered in the second half of March in part, analysts said, because the financing incentives offered didn't carry the same punch by then as cash on the hood might have.
Even with the softer second half, all automakers except Chrysler Group and Suzuki Motor Corp. gained. March's 11.7 million seasonally adjusted annualized rate was the best since December.
Led by Toyota Motor Sales U.S.A., manufacturers boosted incentives in March to levels approaching their all-time peak a year ago. But unlike then, when consumers spooked by the recession held on to their money, this time shoppers responded.
"The incentives are working," said George Magliano, head of North American forecasting for IHS Global Insight. "A year ago, they wouldn't have worked. Now the economy is stronger and supporting a return to the market."
There's also more pent-up demand, said analyst Jesse Toprak of the consulting firm TrueCar. "And one reason financing and leasing packages are working is that approval rates are up," so more consumers qualify for the offers, he said.
Toyota Motor Sales almost beat No. 1 General Motors Co. and outsold Ford Motor Co., February's surprise winner. And that was without many fleet sales, said Don Esmond, Toyota's senior vice president.
"We outretailed both Ford and GM by nearly 40,000 units," he said.
Toyota group sales jumped 41 percent in March, compared with a 9 percent decline in February, when Toyota's recall woes made headlines. Toyota's March financing and leasing push, which Edmunds.com calculated at a company-high $2,256 per vehicle, pushed its volume to 186,863, only 1,148 behind GM. Ford was No. 3 with 183,425.
Toyota's Esmond did not disclose retail volume, but Toyota has a smaller proportion of fleet sales than GM or Ford.
Ford: One-third fleets
Ford said fleet sales were 33 percent of its March volume. It expects that to ease to about 30 percent for the year.
"We shifted at least five points from the daily rental fleet business to the commercial business the past five years," said George Pipas, Ford's chief sales analyst. Rental fleet sales, which typically are less profitable than sales to corporate or government fleets, were only 19 percent of first-quarter volume, he said.
Ford and GM still spent more per vehicle than Toyota, but the gap is less than half what it was in March 2009, Edmunds.com said. And it said Toyota raised March incentives from February by $375, compared with increases of $16 at Ford and $10 at GM.
Meanwhile, Nissan North America again overtook Chrysler Group as No. 5 in the U.S. market. Nissan jumped 43 percent to 95,468, compared with Chrysler's 8 percent slide to 92,623.
It's the second month this year that Nissan has outsold Chrysler, but Chrysler still has a lead of almost 6,000 units for the first quarter. In 2008 Chrysler was No. 4, before American Honda Motor Co. overtook it in 2009 sales. Toyota passed what was then DaimlerChrysler to become No. 3 in 2006.
Last month American Honda gained 23 percent to 108,262. Hyundai-Kia sales rose 19 percent to 77,524. And Volkswagen Group of America sales climbed 39 percent.
Subaru, the only automaker to post gains in both 2008 and 2009, continued to grow. Its March U.S. sales jumped 46 percent to 23,785.
That keeps it ahead of Mazda; its sales rose 6 percent to 23,193. Subaru outsold Mazda for the first time in more than three decades in 2009 and has a lead of more than 1,500 units through the first three months of this year.
Incentives lose punch
Analysts say the current flurry of incentives, mostly financing and subsidized leases that take advantage of the current low cost of money, may be losing their punch faster than cash spiffs.
"Incentives were very effective early in the month but far less so by month's end," said Jessica Caldwell, Edmunds.com senior analyst.
IHS Global Insight's Magliano agreed: "We definitely lost steam as the month went along."
Even so, automakers say they'll stick with spiffs.
Bob Carter, Toyota brand sales chief, said the brand will extend its financing and lease incentives beyond the expiration today, April 5, and perhaps expand its free-maintenance offer, now given to returning customers, to new ones.
American Honda's mid-March incentives package runs until early May. Ford's U.S. sales boss Ken Czubay said Ford would hold incentives stable in April, even though Ford's long-term plan is to reduce incentives.
But easing incentives will be hard to do because market shares are in flux, analyst Magliano said. "This is really a very fluid market," he said. For an automaker looking to buy share, "there is a tremendous amount of opportunity out there."
Jamie LaReau, Kathy Jackson and Chrissie Thompson contributed to this report
March gladness
Results for the top 6 automakers, ranked by March sales
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