By Mike Ramsey And Mike Spector
Auto makers reported their strongest annual U.S. sales since
2006, taking advantage of low fuel prices and interest rates to
rebound from a global financial crisis that hammered results and
forced some companies to undergo government-brokered
restructurings.
Sales of light cars and trucks in the U.S. rose 5.9% from a year
earlier to more than 16.5 million in 2014, according to market
researcher Autodata Corp. December sales were roughly 1.5 million,
up nearly 11% from a year earlier, Autodata said.
The sales results buoyed car executives, blunting the overhang
of a record year for recalls that began with General Motors Co.'s
acknowledgment of a faulty ignition switch in older cars now linked
to 42 U.S. deaths. Fiat Chrysler Automobiles NV also faces scrutiny
over fiery crashes involving older Jeep models, and almost all car
companies are dealing with the fallout from defective air bags
manufactured by Japanese supplier Takata Corp.
But those recalls are taking a backseat in the mind of consumers
wooed by low fuel prices, zero-interest financing deals and more
money in their pockets. Car sales are surging ahead of new vehicle
releases at this month's North American International Auto Show,
and auto makers expect to keep up the improved sales pace this
year.
"The 2015 economic indicators remain robust and the fundamentals
are poised for a continuation of the momentum we saw in the latter
part of 2014," said Ford Senior Economist Emily Kolinski Morris.
She said low fuel prices are boosting consumers' disposable incomes
alongside gains in the job market.
Still, auto sales gains are likely to cool this year and the
Federal Reserve is poised to begin raising interest rates by
mid-year. Auto executives and others played down any potential
fallout from rising rates, suggesting that incremental increases
would keep rates at historically-low levels and still entice
buyers.
"This year looks pretty good," said Mark Wakefield, a managing
director at turnaround and consulting firm AlixPartners LLP. He
expects a moderate rise in auto sales this year largely because of
low fuel prices but cautioned interest rates are "the big thing we
worry about" starting around 2017. A significant rate hike can
raise vehicle prices by thousands of dollars and force auto makers
to ramp up incentives that "murder their profitability," he
said.
Consumers are flocking to higher-margin and less fuel-efficient
pickup trucks and sport-utility vehicles. "I am usually looking for
the black swans when it comes to auto sales, but this year I see
nothing but white swans," said Mike Jackson, chief executive of
AutoNation Inc., the largest U.S. auto retailer.
"There had been a slow migration back to SUVs and pickup trucks.
Now, with cheap gas, I think that may turn into a stampede. I think
it will be very difficult for small cars and especially the hybrids
and electrics," he said
GM and Chrysler posted double-digit sales gains in December. GM
said its sales jumped 19% in December to 274,483 light vehicles.
Pickup-truck sales added nearly 87,000, GM said. For the year, GM
sold about 2.9 million light vehicles, the company said.
Chrysler said it sold 193,261 vehicles in December and more than
two million units for the year, its best December in a decade and
year since 2006. Chrysler benefited from strong demand for its Ram
trucks and Jeep SUVs.
Ford Motor Co.'s sales were flat in December, rising slightly to
219,369. The figure was held back by intentionally fewer sales to
rental-car companies and a limited supply of its best-selling F-150
pickup. Ford said it sold nearly 2.5 million vehicles in 2014, down
slightly from a year ago.
Ford's weaker results pushed its shares down 3.9% amid a broad
market decline. GM shares fell 1.5%, Toyota was off 1.8%, Honda 2%
and Fiat Chrysler lost 3.8%, all in 4 p.m. New York trading on
Monday.
December is traditionally a strong month for auto sales as auto
makers offer holiday deals and discount to clear out older models.
Consumers are currently flocking to showrooms amid low gasoline
prices and an improving U.S. job market.
The month marked the highest average transaction price on record
for light vehicles, according to Kelley Blue Book. The average rose
nearly 3% year-to-year to $34,367 and was up 1.6% from
November.
GM said much of its 19% December sales increase over a year
earlier came from retail transactions, while pickup-truck sales
surged 43%. The company said it was its best December since
2007.
Ford's combined truck and SUVs sales rose 4% in December
although sales of its F-series pickups fell slightly for the month.
Its car sales, meanwhile, declined 1.1%.
Nissan Motor Co. said it sold 117,318 vehicles last month, up
6.9% from a year earlier. Much of the gain came from its car sales,
which rose more than 12%. The company's Sentra, Altima and Leaf
cars posted strong gains. The Japanese company said it set an
annual U.S. sales record of 1.4 million light vehicles.
Honda Motor Co. said it sold more than 1.5 million vehicles in
the U.S. during 2014, the company's second-best total. Its U.S.
sales last month rose 1.5% to 137,281 vehicles, as growth in
sport-utility sales offset a decline in car sales.
Toyota Motor Corp. said its overall U.S. December sales rose 13%
from a year earlier to 215,057 light vehicles. Its full-year U.S.
sales rose 6% to nearly 2.4 million vehicles, putting it third
behind GM and Ford.
Toyota executives pointed to sales of trucks and SUVs driving
the gains. In addition, the auto maker's 25-year-old luxury Lexus
brand posted a monthly sales record of 39,879. Sales of its Camry
sedans were up more than 5% in December, and up 5% to more than
428,000 for the year.
Sales of Toyota's Prius hybrid fell 8% and 12% for the month and
year, respectively, amid low gas prices.
BMW AG reported an 11% December sales increase in its namesake
brand, retaining its rank as the best-selling U.S. luxury brand for
the month and year. It sold 41,526 vehicles last month and 339,738
for the year, topping Daimler AG's Mercedes-Benz brand, which was
the second-best seller for the full year.
Toyota's Lexus brand was the second-best selling luxury brand
for the month and third-best for 2014. Mercedes-Benz sales rose 3%
for the month to 34,009 and 5.7% for the full year. Volkswagen AG's
Audi luxury car unit said its December sales rose 13% to 19,238 and
full-year sales rose 15%.
Write to Mike Ramsey at michael.ramsey@wsj.com and Mike Spector
at mike.spector@wsj.com
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