March Auto Sales Fueled by Incentives, Recovery

An improving economy and incentives war drove more consumers into the nation's dealer showrooms in March, making it one of the best in years, auto makers said Thursday. While largely impressive, the increases were less than industry analysts predicted for some companies.

General Motors started the day off reporting that overall sales rose nearly 21% last month compared to year ago, when factoring in sales from its discontinued brands. Industry-watcher Edmunds.com called for overall sales to rise 27%. Among its four remaining "core" brands, Detroit-based GM said sales rose 43%. Buick sales, bolstered by much improved demand for its newly redesigned LaCrosse midsized sedan, rose 76%.

Crosstown rival Ford Motor (F) reported sales surged 43% last month, while Edmunds.com forecast sales would rise 55%. Demand at the company's namesake Ford brand rose more 46% compared to a year ago, it said. Ford, which sold 178,546 vehicles last month, said strong demand for its Ford Fusion and Mercury Milan midsized sedans, along with improved sales of the Ford Taurus, Mustang and Focus passenger cars kept dealers busier than last year.

With March results now in, the Dearborn, Mich., automaker said it has increased domestic market share for 17 out of the last 18 months. Speaking Wednesday at the New York International Auto Show, Ford president and CEO Alan Mulally credited the company's restructuring plan for boosting sales. Known as the "Way Forward," the plan called for Ford to, among other things, divest itself of its European luxury nameplates, which included Volvo, and to increase its focus on the Ford brand.

Things weren't quite so sanguine at Chrysler Group, which saw fewer sales last month compared to a year ago. The smallest of Detroit's Big Three, the Auburn Hill, Mich.-based company said sales slumped 8%. Meanwhile, Japanese auto makers Nissan and Subaru reported sales rose 43% and 46%, respectively, compared to March 2009. Honda Motor's (HMC) U.S. sales division reported a 22% increase, while Mazda reported U.S. sales in March rose 5.5% compared to a year ago.

Hyundai reported its March U.S. sales rose 15.4% on stronger demand for its Santa Fe and Tucson SUV models. The South Korean manufacturer also said its redesigned Sonata midsized sedan, introduced in February, is third in sales in the category, behind only Toyota's Camry and the Honda Accord. Sales at Kia, which shares a corporate parent with Hyundai, rose 23.5%.

Toyota Motor (TM), which touched off the incentives war early last month, reported sales rose nearly 40% in March, selling 186,863 cars and trucks, besting Ford's total but just shy of the 188,546 vehicles sold by GM. Chris Hopson, an analyst at IHS Global Insight had forecast Toyota sales would rise 33% for the month. Toyota saw sales of its three most popular models, Camry, Corolla and Prius, rise by at least 27%.

The hefty incentives offered by Toyota and other automakers that followed suit were expected to lift March car sales to their highest levels since last summer's Cash for Clunkers program, said Edmunds.com Senior Analyst Jessica Caldwell. Edmunds estimates Toyota increased incentive spending on its vehicles by some $700 a vehicles. The enticements include zero-interest loans, which have been matched by Ford, GM, Honda and Chrysler.

Toyota is trying to overcome a public-relations nightmare after recalling some 8.5 million vehicles worldwide for unintended acceleration and brake problems. The repairs, which Toyota involve shaving gas pedals to prevent them from getting hung up on bulky floor mats and fixing sticky gas pedals, are ongoing.

But on Tuesday, Transportation Secretary Ray LaHood announced that National Academy of Sciences and NASA would both look into whether electronics may have a roll in unintended acceleration, which the National Highway Traffic Safety Administration blames for more than 50 deaths of passengers in Toyota vehicles.

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