Car Sales in March hit Four-Year High

Joel Anderson |

car sales, improving auto sales, auto sales in march, auto sales 2012With economists everywhere still unsure as to whether or not the modest economic recovery in America is to be believed, focus on the sale of durable and consumer goods has been intense. Auto sales, in particular, can be viewed as a strong bellwether for economic growth. Most consumers are unlikely to spend on a new car or other major investments if they feel uncertain about their economic future.

As such, the most recent month's data on car sales offer up a very promising picture of the economic future for the country. Across the industry, car sales experienced a 12.7 percent jump in March, making the most recent quarter the best since the first quarter of 2008. Sales in the United States hit a seasonally-adjusted annual rate of 14.4 million vehicles in March.

“The recovery we saw in the first two months of the year has some legs — it was not a fluke,” said Jesse Toprak, vice president of industry trends and insights at TrueCar.com. “This was the best quarter since 2008, and it shows that people are more comfortable making big-ticket purchase decisions.”

Chrylser Leads Gains

Driving the spike in sales could be driven by a number of factors, but higher gas prices and looser credit restrictions appear to be leading the way. As gas prices increase, those drivers able to are more likely to invest in newer vehicles that have better fuel economy in an effort to save on expenses. What's more, looser credit, driven by improving conditions in the financial sector, can provide consumers who need a new vehicle with the loans necessary to make the purchase.

"The combination of credit availability, an improving economy, pent-up demand and even high fuel prices encouraging people to acquire newer, more fuel-efficient vehicles are all helping to drive industry sales," said Reid Bigland, head of U.S. sales for Chrysler Group.

Chrysler, owned by the Italian car company Fiat (FIATY), once again led the way, with US sales increasing 34 percent in the month of March. On the whole, major car manufacturers spoke positively about the prospects of their industry for the near future.

“The economic recovery and a deep bench of fuel-efficient cars and crossovers have been driving our sales for more than a year, but the combined impact has never been stronger than it was in March,” said Don Johnson, vice president of U.S. sales operations for General Motors (GM). “Since the last time fuel prices spiked, both the economy and GM’s product portfolio are undeniably stronger. We’re now strong across the board in cars, crossovers and trucks.”

However, the promising news on car sales didn't come in time to buoy share prices for any of the Big Three. Ford (F) held steady on Tuesday, gaining just 0.16 percent, while General Motors, the only car company to experience slower-than-expected sales, plunged 4.56 percent. Chrysler, despite the impressive sales numbers, couldn't seem to save Fiat, which lost 1.97 percent.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BLIN Bridgeline Digital Inc. 0.65 -0.03 -4.41 3,697
GM General Motors Company 35.06 0.12 0.35 840,113
F Ford Motor Company 12.47 0.03 0.20 2,108,827

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