Incentives bring car buyers in from the cold

Shopper looks at a Jeep Cherokee diesel at the Hollywood Chrysler Jeep dealership.
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U.S. auto sales in February were more brisk than expected as hefty incentives lured customers into dealerships late in the month despite cold and snowy weather.

General Motors raced past analysts' expectations, saying Monday that sales dipped 1 percent to 222,104 vehicles.

Analysts had expected by a drop of 6 percent for the biggest auto company in the U.S. market.

While GM's Malibu, Cruze and Sonic passenger cars each posted double-digit gains, sales of the company's top-selling Chevy Silverado pickup truck fell 12 percent.

Ford slightly beat expectations by posting U.S. sales of 183,947 vehicles, down 6 percent from a year earlier.

John Felice, head of U.S. sales for Ford, said the month had started slowly but surged in the final week, "providing us momentum" heading into March, when temperatures are expected to moderate.

A poll of 34 analysts by Thomson Reuters showed expectations that overall U.S. sales for February would be flat with a year earlier. Continued cold weather in the month probably kept many car shoppers away from dealers, analysts said.

GM said it expected industrywide U.S. auto sales of 15.4 million vehicles in February on an annualized basis, matching a forecast of 34 analysts polled by Reuters.

Also topping analysts' expectations were Chrysler and Nissan.

Chrysler, a unit of Fiat Chrysler Automobiles, said demand for its two top-selling Jeep models, the Grand Cherokee and the Cherokee SUVs, had helped push its total monthly sales up 11 percent to 154,866 vehicles. Analysts had expected a rise of 8 percent.

Sales of Chrysler's top-selling vehicle, the Ram pickup truck, increased 24 percent.

Nissan showed a gain of 16 percent, led by a 73 percent jump in its Rogue crossover vehicle's sales. Analysts had expected an increase of 12 percent.

Bigger Incentives

Industrywide, the average incentive, a discount to entice consumers but which also eats into auto companies' profit margins, rose 5 percent to $2,633 per vehicle in February from a year earlier and was up 3.3 percent from January, according to the TrueCar research firm and car-buying website.

Partly offsetting the higher incentives was a 3.6 percent rise in average transaction prices, or the figures at which autos are sold.

"Incentive spending is outpacing the rise in average transaction prices, despite year-over-year ATP increases for most automakers," said Larry Dominique, executive vice president of TrueCar. "We expect a return to balance once the winter subsides and inventories ease."

GM and Ford, which ranks second in the U.S. market, are offering some of the heftiest incentives.

Volkswagen reported U.S. sales of 27,112, down 16 percent. Its best-selling vehicle, the Jetta, had sales of 11,908, down 4 percent.

Nissan had its best February in the U.S. market on record, selling 115,600 vehicles. Sales rose 17 percent for its primary Nissan brand and gained 6 percent for its luxury Infiniti brand.

Analysts on average estimated Honda Motor's sales for February had risen about 1 percent and that those of Toyota, Hyundai, and Kia were about the same as a year earlier.

By Reuters.