January Car Sales Stronger Than Expected

by Jeff Gilbert
WWJ AutoBeat Reporter

Car buyers kept dealerships busy in January, normally one of the weakest monts of the year. 

"It's something to grow on," says Edmunds.com senior analyst Jessica Caldwell.

Ford says it's sales were up 13  per cent over last year.  GM and Chrysler sales up around 23 per cent.  Most import brands also posted double digit sales increases.

"I think overall, sales look strong, which is good for January," said Caldwell.  "This is really going to set the tone for 2011.  We're hoping for more recovery."

While sales were down from December, most car companies reported double digit increases from January of 2010, with particularly strong performances at the retail level.

"We're seeing improving credit availability, obviously historically low rates," said Don Johnson, who's GM's vice president of U.S. sales operations.   "As a result consumer confidence is up. It's the highest it's been in eight months."

The industry as a whole expected to see year over year sales up about ten per cent, when all the numbers come in.  But, sales will be lower than what we saw in December.  That's normal, because January is traditionally one of the slowest months of the year.

While consumer confidence remains stronger, those consumers also had a lot of new products in the market.  Ford, for example, seeing a strong debut for the all new version of the Explorer.

"In January, the Explorer was Ford's fastest turning vehicle on the showroom floor," said Ford sales analysis manager George Pipas.  "I don't know if I'd have ever said that would ever happen again, after the great sales years that we had for Explorer in the nineties."

Pipas saying the new Explorer brought in a lot of customers who weren't traditionally SUV customers, attracted by the vehicles improved fuel economy.  He also said that small car sales rebounded nicely in January.

 Dealers say they saw pretty strong traffic.

 "We were 57 units last year, did 112 this year, also good growth in used, up about 10 or 12 per cent," said Richard Genthe, owner of Dick Genthe Chevrolet in Southgate, MI.

"We could have done more units, if we had some particular vehicle lines when we could have obtained more vehicles to sell."

Genthe says the Chevrolet Traverse crossover and Chevy Equinox small SUV were in particular demand.

General Motors had higher incentives than most other manufacturers, averaging about $3700 per car, according to Edmunds.com.  The industry average for January was around $2500 per car.

"It looks to me as if they are almost buying market share at this point," says Edmunds.com analyst Caldwell.  "It's definitely worrisome, and it reminds us of the GM in the past."

General Motors defended the increased incentive speaking as an important way to reach out to customers during a normally slow month.

"A lot of the competitors give up on January, thinking it's going to be low," said Johnson.  "We decided to be pretty specific.  We put a plan in place."

Johnson says he feels underlying demand remains very strong.

"I think it's going to continue," he said.  "We came off of a strong December.  One of the reasons we wanted to get off to a fast start in January was to keep that momentum going."

National Automobile Dealers Association Chairman Ed Tonkin says he's seeing stronger sales.  He says better credit and pent up demand are brining people into the 17 dealerships in his group.

"All of those things are combining, along with some of the good things we're hearing about the economy, and we are really on an up trajectory."

Follow Jeff Gilbert on Twitter @jefferygilbert