Toyota, Honda, VW soar again; Chrysler leads Detroit 3

Toyota Motor Corp., Honda Motor Co. and Volkswagen AG's VW brand continued to post robust U.S. sales increases while deliveries at General Motors and Ford Motor Co. were flat in September, a month that is expected to generate more steady gains for the industry.

Toyota said combined sales at Toyota, Lexus and Scion jumped 42 percent. It was the second consecutive month deliveries rose 40 percent or more as the automaker continues to rebound strongly from last year's earthquake in Japan.

The Toyota division posted a 41 percent increase, helped by passenger car sales, while Scion demand rose 76 percent and Lexus deliveries advanced 36 percent.

Sales were strong all month beginning with the Labor Day holiday, Toyota said.

"The auto industry had another very encouraging month in September," Bill Fay, Toyota group vice president and general manager, said in a statement.

At Honda, sales jumped 31 percent, with the Honda brand up 29 percent and Acura posting a 44 percent increase in volume last month. Demand for the Honda Civic and Accord soared 57 percent, Honda said, while CR-V deliveries advanced 14 percent.

It was the fifth straight month that Honda's U.S. sales gain topped 30 percent.

"Honda is once again firing on all cylinders as we enter fall," John Mendel, American Honda executive vice president of sales, said in a statement.

Volkswagen reported sales at the VW brand climbed 38 percent and boasted it expects to continue to outperform the industry during the fourth quarter. At Kia, sales rose 35 percent to 48,105 last month; the automaker remains on track to set an annual U.S. sales record in 2012.

Detroit's two biggest automakers cited lower truck volume--a traditional stronghold--for sales that were down less than a percent at Ford and up just 1.5 percent at GM. The results will likely mean more market share losses for the companies.

Chrysler Group posted a 12 percent rise in U.S. sales last month, helped by a 27 percent increase in car deliveries and big gains at the Fiat and Dodge brands. Hyundai brand sales rose 15 percent to 60,025 last month, marking its biggest gain since February.

At Nissan Motor Co., sales slipped 1.1 percent, with the Nissan division down 2.4 percent and Infiniti advancing 11.4 percent. Audi said volume rose 27 percent to 12,302 last month and said it remains on track to set an annual sales record in the United States for 2012.

The BMW Group reported a 3.5-percent increase in September sales, with volume flat at the BMW brand and Mini posting a 23 percent increase in deliveries.

The early results signal the industry continues to rebound despite mixed economic reports, high gasoline prices, sluggish job growth and the prospect of deep cuts in federal spending.

'On plan'

"The industry is on plan, Ford is on plan, and we're looking forward to a really good fourth quarter," said Ken Czubay, head of U.S. marketing, sales and service for Ford.

Volume at the Ford division was unchanged and Lincoln demand dropped 3 percent. Ford said retail sales climbed 4 percent last month.

Ford's car sales inched up 1.6 percent and utility vehicle volume rose 9 percent, but truck deliveries slipped 8 percent, partly as a result of the discontinuation of the Ranger pickup.

GM said car volume rose 29 percent and crossover demand inched up 3 percent. GM's truck sales slipped 20 percent, reflecting a 46 percent drop in fleet sales

Chevrolet posted a 1.5 percent increase and Buick volume rose 8 percent, while Cadillac deliveries slipped 1.3 percent and GMC was flat. GM said retail sales at all four brands increased.

At Chrysler, Fiat sales surged 51 percent in September, while Dodge deliveries rose 18 percent, Chrysler said Tuesday.

Sales rose 5 percent at the Chrysler brand, 10 percent at Jeep and 4 percent at Ram.

Truck deliveries rose 6 percent last month, Chrysler said.

It was the company's 30th consecutive monthly gain in U.S. sales, but the smallest advance since volume rose 10 percent in May 2011.

Chrysler's U.S. sales have advanced 24 percent to 1.25 million this year through September.

"Going forward with our current product line up, record low interest rates and a stable U.S. economy, we remain optimistic about the health of the U.S. new vehicle sales industry and our position," Reid Bigland, head of the Dodge brand and chief of U.S. sales for Chrysler Group, said in a statement.

Chrysler's incentives averaged $3,256 last month, the highest among major automakers, TrueCar.com estimates.

Deals, deals, deals

The automaker has been offering zero-percent financing on 2012 Chrysler 300 sedans, Dodge Durango SUVs and Grand Caravan minivans, according to Edmunds.

A year ago, Toyota and Honda were still constrained by inventory shortages that followed the March 2011 earthquake and tsunami in Japan.

U.S. light-vehicle sales are forecast to rise 9.5 percent in September to 1.15 million units, according to the average estimate of 10 analysts polled by Bloomberg. The seasonally adjusted annualized rate may accelerate to 14.5 million, based on the average estimate of 16 analysts, from 13.1 million a year earlier.

It would be the fourth consecutive month and seventh month this year the SAAR has topped 14 million.

Chrysler on Tuesday forecast the September SAAR will reach 14.9 million units, including medium and heavy-duty trucks. GM expects the SAAR to climb to around 14.5 million in September.

In August, the industry's annualized sales pace reached 14.5 million--the best showing since August 2009, when the U.S. government offered incentives for buyers to swap older vehicles for new models.

Industry sales are up 15 percent to 9.7 million units this year through August and on track to top 14 million units for the year.

"The economic indicators and consumer confidence are showing improvement and the traffic in our showrooms is further encouraging our optimism for the fourth quarter," Ludwig Willisch, CEO of BMW of North America, said in a statement.

Low interest rates, easing credit markets, incentives, new and redesigned models, and pent-up demand are fueling the industry's sales gains. U.S. consumers also continue to shrug off higher gasoline prices and in many cases are trading in older, less fuel efficient cars and light trucks.

"Market conditions continue to be ideal for automakers with lower incentive spending, high average transaction rates and double digit sales growth," TrueCar.com analyst Jesse Toprak said today.

2012 closeout

Fatter discounts on remaining 2012 models also helped drive industry sales last month.

Kelley Blue Book says the hottest segments last month were compact crossovers, large pickups and subcompact cars. Chevrolet, Ford and Chrysler offered cash rebates of $3,500 or more on full-sized pickups.

Banks, bolstered by loose monetary policy, are charging U.S. buyers the lowest interest rates on new-car loans since the Federal Reserve began surveying them in 1971.

Toyota, GM, Ford and Nissan also are offering zero-percent financing on some models, according to Edmunds.com.

"There's no question that the quantitative easing and the pressure on interest rates has helped the industry," said Paul Ballew, chief economist at Dun & Bradstreet in Short Hills, N.J. "It's absolutely breathtaking to think about not just zero-for-60 programs, but just base interest rates. It's insane."

With car prices rising, more people are financing their purchases. This year through August, 59 percent of car buyers took out a loan, compared with 53 percent in 2007, according to J.D. Power and Associates.

Leasing, which also becomes more affordable as the cost of borrowing falls, grew to 21 percent of sales, up from 13 percent in 2009, J.D. Power said.

Average monthly payments fall

The average monthly loan payment on a car fell to $462 this year from $483 in 2007, as the average price of a car has risen to $32,384, from $30,880 five years ago, according to J.D. Power.

The average lease payment has also fallen to $419 this year, from $479 in 2007. Payments are down because of declining interest rates and longer loan terms, J.D. Power said.

"We're starting to see folks with lower credit scores come back and they have a higher tendency to take extended loan terms," said Thomas King, senior director at researcher J.D. Power. "The prices people are paying for vehicles are higher now, so longer- term loans are an important way to make them affordable."

Buyers with lower credit scores are also benefiting from more-affordable loans. Sales to B-tier buyers, those with credit scores of 650 to 679, have risen 26 percent this year, compared with a 7 percent rise in sales to those with A-plus credit, or scores from 790 to 999, said Thomas King, senior director at researcher J.D. Power & Associates.

Availability and affordability of auto financing is improving faster than home mortgage rates are falling, said Diane Swonk, chief economist with Mesirow Financial in Chicago.

That helps explain why U.S. auto sales are coming back faster than the housing market, she added.

By David Phillips- Automotive News