Detroit leads the way as US sees strong growthGeneral Motors meanwhile announced a rise in sales of 7% during February, with senior executives pointing to a knock-on effect of rising house sales fuelling the market for pickups and SUVs.
US car companies have continued a strong start to the year with many manufacturers reporting steady growth in February. The industry posted big gains in January but February's growth figures are more modest. Volkswagen saw an increase of almost 3% during February and the company expects that trend to continue throughout the year. Volkswagen's American chief executive, Jonathan Browning, welcomed the news but cautioned about the effects of sequestration. He commented: "We will see moderate growth as we go throughout the year but we do believe the debate on sequestration and the global economic environment does have a drag on consumer confidence." Sequestration is the term being used in the US for government public spending cuts.
General Motors meanwhile announced a rise in sales of 7% during February, with senior executives pointing to a knock-on effect of rising house sales fuelling the market for pickups and SUVs. GM vice president Kurt McNeil said: "The housing sector has now joined auto sales in propelling the US economy forward. More importantly, the recovery in new home construction is reinforcing the underlying improvement in auto-buying conditions, especially for pickups."
Ford also had an extremely good month with sales growth of 9%, which made it the best February since 2007 for the Detroit giant. Elsewhere, Toyota recorded a rise of 4.3% and Hyundai announced a modest 2% increase. Commenting on the figures, industry analyst Brian Johnson of Barclays Capital said: "In spite of concerns over reduced consumer confidence related to the end of the payroll tax holiday, we believe these head winds are unlikely to affect the new vehicle market, as we see purchasers of new vehicles as less sensitive to the income reduction."
The figures also reflect increased profitability as discounting and price incentives declined. Analyst Kristen Andersson of TrueCar.com said: "Automakers enjoyed a month of ideal conditions for profitability in February, with incentives down nearly 4% and sales up. We expect incentives spending to track within a narrow range the rest of the year as the supply of vehicles and consumer demand are forecasted to increase at similar levels." The positive sentiments were echoed by many industry watchers who predict continued growth for the rest of 2013. Factors contributing to the growth are thought to be the availability of low interest car loans, affordable leasing deals and the release of high quality new models in the last few months. The February increases were even more impressive as 2012 was a leap year, with 29 days in February compared with 28 in 2013.
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