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March surprises with strong finish

by Bill Cawthon on

March came in like a lion, with a strong sales momentum promising to continue February’s frenetic pace. Then the wheels started to come off; the situation in the Middle East, driving speculators to bid the price of oil up over $100/barrel; Japan was hit by the fifth-largest earthquake on record followed up by a nuclear nightmare that is still unfolding. Citing the uncertainty being created by all these factors, analysts rushed to trim their estimates. J.D. Power cut 400,000 units from its prediction and TrueCar.com cut its forecast to a seasonally adjusted annualized rate (SAAR) of 12.5 million.

So what happened? March went out like a lion, as well, with a SAAR of 13.11 million, down 330,000 sales from February’s rate but up 1.38 million from March 2010. It was the second-highest SAAR posted since the “cash-for-clunkers” program. Sales totaled nearly 1.25 million cars and light trucks, up 16.9% from last March 2010 and 25.5% ahead of February 2011. Year-to-date (YTD) sales are now 20.2% ahead of the first quarter of 2010.

When the numbers were all tallied, there was a shift in the buying likely caused by the rapid run-up in prices at the pump: passenger cars claimed 52.5 percent of the total market, reversing a trend that had been developing for a few months. But there has not been a rush to the smallest cars: some, like the Honda Fit and Ford Fiesta, showed big gains, but sales of others, like the Toyota Yaris, Chevy Aveo and Nissan Versa, actually declined.

Chrysler enjoyed the largest percentage sales increase of the top six automakers, up 31.4%, with big gains posted by the Jeep Compass, Patriot and Grand Cherokee and Dodge Charger. Don’t know if it is the intentional buzz created by the “Imported from Detroit” campaign or the unintentional buzz created by the resignation of a certain Detroit auto critic, but the Chrysler 200 posted the highest sales of any Chrysler Group passenger car except the Dodge Charger.

Chrysler March car sales weren’t just higher, they comprised a larger percentage of Chrysler’s total sales. In January 2011, cars accounted for 17.4% of sales; in February that percentage increased slightly to 18.7 percent. In March, cars claimed 27.6% of sales, not just a major jump month-over-month, but a comparatively high percentage on a historical basis. Don’t know how much of that activity is fleet sales but it would appear there is a healthy component of retail sales in there, too.

Chrysler minivans took a tumble in the March rankings with the Caravan and Town & Country coming in third and fourth, respectively. The Odyssey beat the Sienna by 137 sales for the top spot. The Dodge Grand Caravan still holds the top spot in the YTD standings. The race is tight; the difference between first and fourth places was just 1,115 sales in March and 4,001 for the first quarter.

Ram sales were nice to see; as good as the truck is, one has to wonder why it hasn’t sold in larger numbers. The Ram bested the fourth-place GMC Sierra by over 10,000 sales and more than doubled the combined sales of the Toyota Tundra and Nissan Titan.

The first 500 Cinquecentos were delivered to their Fiat-loving owners in March. Now comes the interesting part: how will it stack up against the competition? Fiat has fixed the main thing that brought it to grief last time it was in the U.S. market: a lack of an organized dealer and support structure. For those who think this isn’t a big deal, consider Volkswagen’s initial foray into the U.S. market when it was distributed by Max Hoffman. The Beetle flopped. VW left the U.S. market and returned with its own, vastly improved distribution system in 1955 and, by 1970, VW was outselling Plymouth and Oldsmobile.

On a yearly basis GM has been the top-selling automaker in the United States even longer than the Ford F-Series has been the best-selling pickup. There have been just a few well-separated months where another manufacturer took the crown; this was one of those months. With a 19.1% gain, Ford came in 5,674 sales ahead of the General as the Fiesta gained traction and the Fusion and Escape set new monthly sales records. The new Explorer is hitting Ford’s targets. The Fusion is now the top-selling American-badged car. Lincoln sales fell slightly as Ford’s hope that marketing and gee-whiz gadgetry can overcome lackluster (and homely) product seems to be having the kind of results that should be expected. Lincoln remains well behind Audi in eighth place among the premium marques.

General Motors had to be satisfied with the smallest increase of the major players, up just 9.9 percent. The company says the relatively small bump is due to a higher percentage of retail sales and a reduction in incentives. The new Cruze, the long-overdue replacement for the  Cobalt, is already among the top 20 best-selling vehicles and is the top GM car in YTD sales. Cadillac dropped to fifth in the luxury rankings in March but remains fourth in YTD standings.

Toyota was the only major automaker to lose ground in March. Overall sales were down 5.7% as a slump in light truck sales wiped out small gains in passenger cars and the Lexus brand. The normally popular RAV4 and Venza both took big hits last month. Lexus outsold BMW to take the second place in the upscale group in March but remains third behind Mercedes and BMW in YTD sales. Prius sales jumped 57.9%, possibly reflecting late-month consumer fears they might not be able to get the made-only-in-Japan hybrid if they waited.

Honda sales improved by 18.9% a strong demand for the Fit, Civic, Insight and CR-V overcame a slowdown in demand for the Pilot and Ridgeline. The Accord CrossTour is looking more and more like the answer to a question nobody asked: sales were down 22.5% from last year’s tepid levels.

Nissan had a bang-up month, setting records and watching the Altima become the top-selling passenger car for the month and slipping past the Accord to be the second-best-selling car in YTD sales. Sentra sales more than doubled. On the truck side, sales of the Pathfiner, Rogue and new Quest minivan more than compensated for declines in sales of the Titan and Exterra. This was supposed to be the month that Nissan passed Chrysler for fifth place and, according to most sources (including the manufacturers) Nissan came very close, finishing the month just 589 sales short. However, Ward’s Automotive has its own method for determining light vehicle sales and trimmed 655 units from Chrysler’s March total and 1,631 from its YTD total, giving Nissan the lead by 126 sales for March and 39 sales for the first three months of 2011. At Allpar, we’re sticking with the majority.

Among the second-tier Japanese automakers, Subaru had its second-best sales month ever, posting all-time Outback sales. Mitsubishi sales jumped 39.1% in March – the company’s largest monthly sales increase since the “cash-for-clunkers” incentives. Mazda sales were up 33.3% on strong demand for the Mazda5. Suzuki managed to pull out another month in the black with Kizashi sales up 77 percent.

Hyundai and Kia celebrated another month and quarter of record sales. Sales were up 31.6% for Hyundai and 44.7 for Kia. The Elantra was the star for Hyundai, while the Forte, Optima and Sportage did the trick for Kia.

The European automakers had generally positive results, with only Jaguar coming up short. Mercedes took the top spot in the premium segment for both March and the first quarter. Smart missed its mark in March and is down 9.3% for the year. BMW slid to third in March but remains second in YTD sales thanks to good sales of the 5-series. Thanks to an expanded lineup, Mini had records sales in March and its second-best month since the brand came to the U.S. Volkswagen’s Jetta set an all-time sales record last month as VW posted its best sales month since 2004. VW’s premium Audi line had its best-ever March and all-time best first quarter: A8 sales were especially strong. Porsche sales leapt 35.9% thanks to a 164% increase in sales of the Cayenne.

Volvo sales improved again, up 21.6% in March and now 10.2% up for the year. Saab sales were also up a whopping 524.1 percent, but money problems may doom Spyker’s efforts to keep the quirky Swedish brand going.

As mentioned, Jaguar sales dropped 11.3 percent, but the cat is still ahead on a YTD basis. Its partner in Tata, Land Rover, saw sales jump 26.2 percent.

While some of the increase in car sales might be due to the increase in fuel prices, truck sales were up 64% and the most popular cars weren’t the most efficient.

The month ahead will be very interesting as the real impact of the damage to Japan’s infrastructure begins to be felt. Already, GM and Ford have briefly shut plants and Chrysler has restricted dealer orders of almost any paint color other than silver, blue or white. There will be shortages of popular Japanese vehicles, including the Prius. Hybrids in general could be severely hurt because their battery packs depend on Japanese storage technology. Shortages of semiconductors and integrated circuits is likely.

The problem is not so much the damage to the regions that took the brunt of the earthquake and tsunami, or the catastrophic loss of life. They are tragic and certainly not to be regarded lightly, but Japan’s power grid took a major hit with the loss of the reactors at the Fukushima Daiichi nuclear plant, some of which will never be able to be brought back online. This means long periods of the rolling blackouts that have become common.

The American automakers may have an interesting opportunity. There’s no doubt there will be a shortage of Japanese-brand cars and dealers are already dropping incentives. The U.S. economy is gradually improving and banks are becoming more willing to lend. Will Detroit be able to persuade buyers to not defer a new car purchase and select a Chrysler, Ford or GM product?

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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