Ahead Of The Bell: January Auto Sales

By TOM KRISHER

DETROIT (AP) â¿¿ The recovery in U.S. auto sales from the Great Recession really got rolling at the end of last year, and it looks like the momentum continued in January.

Industry analysts and the CEO of the nation's largest dealership chain say sales last month were far better than the first month of 2012 as drivers kept replacing aging cars and trucks that they held onto during the recession.

Automakers release January sales figures on Friday, and by all accounts, sales will continue to be a bright spot in an otherwise lackluster U.S. economic recovery.

"(January) was like a sprinter out of the starting blocks," said Mike Jackson, CEO of the AutoNation dealership chain.

Sales of new cars and trucks should run at an annual rate of 15 million to 15.4 million in January, much stronger than last year's annual sales of 14.5 million, according to analysts. Sales for the month should exceed 1 million vehicles and should be 8 percent to 15 percent higher than a year earlier.

Not bad for a month where people usually hunker down and avoid going out in winter weather in much of the country.

Jackson, whose chain reported record fourth-quarter earnings per share on Thursday, said he thought there might be a hangover in January from the strong finish to last year. But he said people who focused on paying down debt the past few years are now making big-ticket purchases at a robust pace. Consumers are saying: "I'm moving ahead with my life. I'm getting a new vehicle," Jackson said.

If January's estimated pace holds for the rest of the year, new car and truck sales will match analysts' expectations for the year of 15 million to 15.5 million. That's a million more than last year. Although still far from the recent peak of about 17 million in 2005, the industry could sell a whopping 5 million more cars and trucks than it did in 2009, the worst year in at least three decades.

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.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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