New-vehicle sales in the U.S. maintained a strong pace through February, ratifying the forecasts of analysts who said that low interest rates, pent-up demand and strong employment were motivating consumers to buy.
Fiat Chrysler Automobiles (FCA - Get Report) posted a 12% sales gain from the same month a year ago, while Nissan (NSANY) said its U.S. vehicles sales were 10.5% higher. Analysts noted that last month, with an extra day for leap year and higher discounts offered by automakers and retailers, will be the best February since 2000.
No. 1 U.S. producer General Motors (GM - Get Report) reported a 1.5% drop in sales for the month, which it said was due to a planned reduction in sales to rental fleets. GM said it intends to reduce its proportion of lower-profit rental sales to about 20% of the total this year, compared with a 22% to 24% average over past years.
LMC Automotive, a consulting firm, early Tuesday projected an 8.1% year-over-year increase in sales and a seasonally adjusted annual rate of sales of 17.7 million vehicles for the month. Assuming the rest of the year continued at or near this rate, it would result in one of the strongest sales years in history.
"Consumers seem to be shrugging off the volatility in the stock market and higher interest rates," said Jeff Schuster, senior vice president of forecasting for LMC. "Very low fuel prices and many new vehicles in showrooms should help drive another strong year for auto sales."
Average new-car transaction prices stayed strong for the month at $33,781, up 2.2% from a year earlier and roughly flat from last month.
A contingent of analysts expressed caution about the imminent possibility of a cyclical downturn for U.S. vehicle sales after more than six years of annual increases. Their opinions are reflected in worries about slow economic growth and the broad selloff of stocks since January.
"Increased incentives (discounts) are helping offset part of the growth in pricing, as incentive spend is nearing pre-recession levels in recent months," said Tim Fleming, an analyst for Kelley Blue Book.
"Low gas prices are attracting consumers toward pickup trucks, with average transaction prices up a combined 6% for the segment," he said. "The same growth has not been seen in traditional car segments like compact and mid-size cars, which are both up 0.5%, or around $100.''