Auto Sales Shake Off Winter Blues

The auto industry had a good March, with an overall 25% sales increase -- the biggest since October 2001.
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DETROIT (

TheStreet

) -- March was a good month for the auto industry, as sales rose about 25% and most automakers reduced incentive spending.

Ford

(F) - Get Report

reported a 39.8% sales increase, or 43% without Volvo, which it is selling.

Toyota

(TM) - Get Report

, helped by incentive spending, reported a 41% increase.

General Motors

reported a 21% increase, but said sales of its four core brands rose 43%.

Chrysler

reported that sales fell 8% on the eve of the birthday of founder Walter Chrysler, who was born April 2, 1875.

March sales were clearly helped by a bounce back from February, when sales were impacted by poor weather and questions about Toyota and about the value of its used cars that customers sought to trade in. "Some of the increase from February to March reflects pent-up demand," said analyst George Pipas on the Ford monthly sales call.

Pipas said the industry's monthly sales increase of 25% to 26% was the biggest since October 2001, when 0% financing was simulative. He said the industry's seasonally adjusted sales rate for the first quarter was about 11.3 million. "Auto sales are on track for a modest recovery in 2010," he said.

GM sales were led by

resurgent Buick

, which saw a 76% overall sales gain, including a 34% gain in retail sales. Both sales categories rose for the sixth straight month. "Through February, Buick was the fastest growing brand in the industry, and we estimate Buick will be the fastest growing brand for the first quarter," said Buick general manager Brian Sweeney, on the GM sales call.

Buick sales were led by the LaCrosse, which rose 236% to 6,054 cars. Buick is also seeing gains in China, where it is the second most popular brand after Volkswagen.

Susan Docherty, vice president of marketing, said GM also boosted its market share, but declined to project the total. She said the increase occurred despite a sharp drop in incentive spending. According to Edmunds.com, GM incentive spending fell to $3,519 in March, down from $4,772, a record high for GM in the same month a year earlier.

Industry average incentive spending in March was $2,742, down from $3,164 a year earlier, Edmunds.com said. Ford incentive spending was $3,304, down from $3,673. Toyota incentive spending was $2,256, a record high for the company, up from $1,565 in March 2009.

The incentives helped, of course, but Toyota also said that buyers remained loyal. "It doesn't matter how good the deal is, I don't imagine anyone would buy a new car or truck from a brand they didn't trust," said Don Esmond, senior vice president, on the Toyota sales call.

Asked if incentives would continue, Esmond responded: "We'll transition, as we do on a monthly basis. We'll take a look at the current market, at where our competitiors are. Were not going to walk away from our customers ... I'm sure our customers will continue to see some great deals in the marketplace."

Esmond said the last weekend in March was Toyota's best since cash-for-clunkers in August.

Ford and GM continued to remake the model of an industry that, until a restructuring that included bankruptcies at GM and Chrysler, involved making too many cars at too high a cost and selling them at too many dealers. GM said its March 31 inventory was about 428,000 units, up 8,000 from February and about 338,000 vehicles fewer than a year earlier. Ford inventory was about 412,000 units, the same as a year ago.

In mid-afternoon trading, Ford stock was up 16 cents at $12.73. Toyota stock was up 21 cents at $80.63.

-- Written by Ted Reed in Charlotte, N.C.

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