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Share Name | Share Symbol | Market | Type |
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General Motors Company | NYSE:GM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.46 | 1.03% | 44.93 | 45.15 | 44.59 | 44.90 | 4,952,856 | 16:46:31 |
By Anne Steele
Poor weather weighed on U.S. auto sales in February, but did little to stem Americans' growing appetite for pricier trucks and sport-utility vehicles.
While several auto makers posted lower-than-expected volumes for the month, light-vehicle sales rose 5.3% from a year earlier. The annualized sales pace eased to a 16.23 million adjusted rate, from 16.66 million in January. General Motors Co. and Toyota Motor Corp. were among the industry's standouts, reporting February gains of 4.2% and 13%, respectively.
Buyers are continuing to favor heavier vehicles that had fallen out of fashion when high gas prices and a weak economy restrained consumers near the end of last decade. In February, sales of light trucks--buoyed by low fuel prices--represented 54.4% of the market, a level the segment hasn't reached on an annual basis since 2005.
Among German luxury-car makers, BMW AG kept its U.S. market lead with its February sales rising 14% from a year earlier. Second-place Daimler AG's Mercedes-Benz reported a 4.5% gain, while sales for Audi AG rose 5.3%.
Auto executives expect the light-truck gains to hold as long as gasoline prices remain relatively low. Buyers are shifting to SUVs, such as the Chevrolet Traverse, from sedans, like the Toyota Camry. Light trucks and SUVs tend to achieve lower fuel economy than passenger cars, so the move poses headaches for regulators trying to enforce more stringent fuel-economy standards.
Auto makers aren't complaining. Light trucks--which include SUVs and many so-called crossover wagons--generally commands higher prices and profits than cars. Ford Motor Co. sales analyst Erich Merkle said on Tuesday the flight to SUVs would accelerate as baby boomers and younger buyers choose vehicles that offer more utility.
Alyssa Fall, a 23-year-old loan processor from Valencia, Calif., traded in her 2014 Kia Optima hybrid sedan in February for a 2015 Ford Escape SUV. Ms. Fall and her husband Drew are expecting their first child in July and their 80-pound German shepherd puppy can't fit in the back of a passenger car.
"It just wasn't happening in the Kia Optima," Ms. Fall said. The Escape, she said, is "a lot bigger than anything we could have hoped for."
The Falls took advantage of the Presidents' Day sale last month at Galpin Ford, using a trade-in deal and low lease price to keep monthly payments low.
Buyers like the Falls are helping drive up transaction prices in the U.S. auto industry. The combination of more trucks and higher sales of luxury cars drove transaction prices to a new monthly record of $33,229, up 4% compared with a year earlier.
Auto makers have helped make buying an SUV more acceptable. The Escape is built on the same underpinnings as Ford's Focus compact, but is roomier. Buyers pay a premium for that extra capacity: the base price of a Focus is $17,700. compared with $23,000 for an Escape.
In February, Ford's transaction prices were up 5% from a year earlier, Mr. Merkle said. At GM, transaction prices were up $2,668 at $34,682 due to a 36% increase in truck sales and sizzling demand for its SUVs, including the GMC Yukon and Cadillac Escalade.
The higher transaction prices are allowing auto makers to book bigger profits in North America at a time when key emerging markets, notably Brazil and Russia, are slumping. However, as buyers take on bigger payments, they also take on more risk.
Mark Wakefield, a partner at management consulting firm AlixPartners LLP, said consumers are increasingly using long-term loans, with terms of seven years, or leases subsidized by the auto companies to offset the pain of higher transaction prices. So, while people aren't feeling an immediate pain in monthly payments, they are feeding a potential bubble.
"It's risky because of the used price," Mr. Wakefield said. "If a lot of used supply comes online it's going to bring down prices," and that will put buyers in a negative equity position for years, and leave banks and auto-finance arms funding the leases in a bad position.
Overall, Ford's sales fell 2% over a year earlier amid a decline in demand for passenger cars and production changeovers for models including the F-150 truck and Edge SUV. Fiat Chrysler Automobiles NV and Nissan Motor Co., two of the fastest growing auto makers in the U.S., released sales figures that missed expectations. Chrysler, relying on Jeep's breakneck gains, posted a 6% sales gain while Nissan sales grew 2.7%. Honda Motor Co.'s sales grew 5% compared with February 2014.
Chelsey Dulaney contributed to this article.
Write to Anne Steele at anne.steele@wsj.com
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