Sales appeared to be strong in January even though deals weren't as good as last year. The auto industry spent 8 percent less on discounts last month than it did a year earlier, according to the TrueCar.com auto pricing site. Of all major automakers, only Hyundai and Volkswagen raised incentives from what they spent in January of 2012, TrueCar said.
But that could change later in the year as automakers are expected to compete for sales with new vehicles and better deals.
VW was expected to lead all automakers in January with a 27 percent sales increase, with Toyota and Honda close behind, according to TrueCar.
Automakers are looking to the U.S. to make up for falling sales in Europe and slowing growth in emerging markets. The U.S. appears poised to deliver as the economy heats up, said Jeff Schuster, senior vice president of forecasting for LMC Automotive, an industry consulting firm.Now automakers and parts supply companies are starting to worry about making enough cars and components, said Schuster. Many suppliers cut their operations or went out of business altogether during the recession, and are having a hard time ramping back up to meet demand. Last year U.S. unemployment eased, the housing industry started to recover and people felt a bit more confident in the economy. Interest rates also stayed low and banks made loans available to more customers, even those with lousy credit. People began to replace cars and trucks that they'd owned since before the economy went sour in 2007. The average age of a vehicle in the U.S. grew to a record 11.2 years. Also, the S&P 500 had its strongest January since 1997.