Chrysler, Hyundai set pace as auto sales rise 11 percent

Chrysler Group, Volkswagen Group, Hyundai and Kia set the pace as U.S. light vehicle sales rose 11 percent in January from a year ago, signaling the industry's recovery is gaining traction.

Chrysler's sales advanced by 44 percent last month, and volume climbed 40 percent at the Volkswagen Group.

Ford Motor Co., Toyota Motor Corp., and Nissan Motor Co. also posted sales gains last month, but General Motors said deliveries dropped 6 percent.

It was GM's first year-over-year monthly sales dip since May. GM's four brands all posted declines, with Chevrolet down 1 percent, GMC down 10 percent and Buick and Cadillac off 23 percent or more. A year ago, GM's sales were aided by generous discounts.

Automakers sold 913,284 light vehicles last month, up 11 percent from 819,886 a year ago.

The seasonally adjusted annual sales rate for January hit 14.2 million--far above estimates and the highest rate since August 2009, when the government's cash for clunkers program drove demand.

"The strength that the economy and the auto industry showed in the fourth quarter carried into January, so we believe the year is off to a good start," Don Johnson, head of U.S. sales operations for GM, said in a statement.

The January SAAR compares to a SAAR of 12.7 million units a year ago and 13.6 million in December.

The SAAR has now topped 13 million units each month beginning with September.

Chrysler's sales have now increased 22 consecutive months, including eight straight months where volume has advanced 20 percent or more. The automaker said it sold 101,149 cars and light trucks in January, up from 70,118 units a year ago.

Toyota posted a 7.5 percent increase in sales, with the Toyota division's 9 percent gain offsetting a drop of 5 percent at Lexus.

Honda Motor Co., hobbled for most of last year by inventory shortages stemming from the March 11 earthquake in Japan and floods in Thailand, posted its first sales gain since April. Honda said U.S. sales rose 9 percent to 83,009 units in January, with the Honda brand up 9 percent and Acura up 5 percent.

"Honda's return to full strength on the manufacturing front is already beginning to pay dividends on the sales floor," said John Mendel, American Honda's executive vice president for sales.

Hyundai Motor America set a January sales record of 42,694 units, up 15 percent from 2011. Kia also posted record January sales of 35,517 units, a 28-percent increase over the same period a year ago. It was the 17th straight monthly gain for Kia in the U.S. market.

Volkswagen AG said it sold 27,209 VW models in January, a 48 percent increase over a year ago.

January is typically the weakest month of the year for new car and light truck sales, but analysts and automakers are looking for signs the industry's recovery remains on track after a strong finish to 2011.

"We started the new year with a bang," Reid Bigland, head of the Dodge brand and U.S. sales at Chrysler, said in a statement.

Jeep brand sales increased 37 percent in January, Chrysler said, with all five Jeep models posting double-digit sales gains. Ram pickup sales climbed 47 percent last month, while Dodge deliveries increased 29 percent.

Ford said its U.S. sales for the month increased 7 percent to 136,701 vehicles. Sales of the Ford Focus drove 30 percent of the increase, the automaker said in a statement.

Sales were up 8 percent at the Ford division, but declined 8 percent at Lincoln. Demand for the Focus, helped by fatter discounts, surged 60 percent to 14,400 in January, Ford said.

"January started off with solid sales versus year-ago levels," Ken Czubay, Ford's vice president of U.S. marketing, sales and service, said in a statement. "Ford saw the same solid month, with smaller vehicles in higher demand. Escape continued its record-setting run, and Focus set the pace for car sales in California, Texas and the Southeast."

Nissan said its January sales rose 10.4 percent to 79,313 units. Nissan brand sales climbed 13 percent to 72,517, but Infiniti brand sales fell 8 percent to 6,796.

Mazda said heavy holiday advertising helped its U.S. dealers sell 23,996 vehicles last month, up 68 percent from January 2011 and the brand's best January sales since 1994.

2012 outlook

J.D. Power and Associates estimated fleet sales increased 9 percent to 188,600 units compared to January 2011, and accounted for 22 percent of industry volume during the month.

The gradual rebound in the U.S. economy, a more favorable credit environment, healthy light vehicle stockpiles and pent-up demand are expected to provide another lift to new car and truck demand this year.

"Some people are starting to feel comfortable enough in the economy that they are willing to buy a car," said Jim Hall, principal of 2953 Analytics Inc., an automotive consulting firm in Birmingham, Mich. "Others are saying, 'I've got to replace this old car because it's nickel and diming me to death.'"

U.S. car and light truck sales totaled 12.78 million units last year, up 10 percent from 2010. Sales for 2012 are forecast to hit 13.6 million, up 7 percent from last year, based on a survey of 11 analysts by Automotive News.

Some automakers see U.S. sales topping 14 million units this year as more consumers replace aging cars and light trucks.

"Retail light-vehicle sales in January are showing stability coming off the 2011 high note in December," John Humphrey, head of global automotive operations at J.D. Power and Associates, said in a statement last week.

"Vehicles are currently remaining on dealer lots for fewer than 50 days on average, which is the lowest level for January for the past several years," Humphrey said. "This is a good indication that pent-up demand is beginning to return to the market."

The average age of cars and trucks in the United States reached a record 10.8 years as of July 1, 2011, R.L. Polk & Co. reported last month. That's up from 10.6 years in 2010, and continues a trend that started in 1995, when the average age of a car was 8.4 years, according to Polk, which tracks state vehicle registrations.

Economic jitters, weak employment growth, high consumer debt, and stagnant household income have kept many people from making big-ticket purchases.

Dealers watch discounts

Mike Sullivan, a dealer in Santa Monica, Calif., said his 11 stores in the Los Angeles area had a solid year in 2011, despite inventory shortages, with profits "up again."

He's encouraged that some negative macroeconomic factors--such as the Southern California housing market--have stabilized.

"No one is talking like the sky is falling anymore," said Sullivan, who operates Volkswagen, Toyota, Audi, Scion, Lexus, Porsche, Subaru and Fisker franchises.

But he worries that manufacturers may over produce this year, adding pressure to boost rebates.

"Some automakers are planning for a big year, and I see some risk we may be getting ahead of ourselves," Sullivan said. "But it's not keeping me awake at night."

Autodata estimated average discounts dropped 10 percent per vehicle last month compared to $2,675 in December, when most automakers offered year-end and holiday deals.

Ryan Beene and Larry Vellequette contributed to this report

By David Phillips- Automotive News