U.S. Auto Sales Up In September On Big Trucks

U.S. buyers shrugged off economic worries and snapped up SUVs and pickups last month, surprising the auto industry and raising hopes that a bumpy year will end on a high note.

Big trucks typically sell when the housing market and construction industry are strong, gas prices are low and consumer confidence is high. None of those was true in September. The economy remains weak, confidence is shaky and a gallon of gas prices cost nearly $1 per more than in September 2010.

But other factors boosted truck sales. Small businesses must eventually replace aging fleets of work trucks, and auto companies offered some good deals to clear out 2011 model trucks. They also stepped up their marketing. And consumers are learning to live with economic uncertainty.

"We see consumers being more comfortable with buying cars in a continuously volatile environment," said Jesse Toprak, Vice President of Industry Trends and Insights for the car pricing site TrueCar.com. "Traditionally, they would have postponed making the purchase decision."

U.S. vehicle sales rose ten percent from last September, according to Autodata Corp. September saw the fastest sales pace since April, and automakers expect that pace to stay steady for the rest of this year.

Nearly fifty-four percent of vehicles sold were trucks and SUVs, the highest percentage this year. That's good news for automakers, which make much bigger profits on trucks and SUVs. Truck sales at General Motors Co., Chrysler Group LLC, and Ford Motor Co. grew in the double digits, outpacing cars. Even Honda Motor Co., which normally gets the bulk of its sales from cars, sold 3,000 more trucks than cars.

A shortage of cars is another reason truck and SUV sales were strong. Analysts had expected more Japanese cars to fill showrooms after months of shortages related to March's earthquake and tsunami.

But Honda and Toyota continued to struggle with product shortages. Toyota's September sales were down 17.5 percent, while Honda's fell eight percent.

Truckloads of new Honda vehicles arrived at dealerships during the last week of September and Toyota Motor Corp.'s new Camry sedan recently went on sale, but they were too late in both cases to give September totals a significant boost.

Bob Carter, Toyota's U.S. Sales Chief, said October should be a turning point. With all of its plants now running, the automaker expects its Toyota division to post its first year-over-year sales increase since April and it expects to post sales increases through the fourth quarter and beyond.

Many buyers were replacing trucks in September because they had to. The average truck on the road is now around 10.1 years old, according to R.L. Polk and Associates.

"A commercial owner cannot afford to have their vehicle out of service," said Don Johnson, GM's Vice President of U.S. sales.

Promotions also helped. GM was offering zero-percent financing for sixty months and $1,000 cash on the 2011 Chevrolet Silverado 1500 pickup. But Edmunds.com said incentive spending was only up three percent from August, to an average of $2,453 per vehicle, and was actually down from last September.

Paul Ballew, a former GM Chief Economist who now works for Nationwide Insurance, said deals will probably get more generous in the last part of this year. Japanese automakers will have to offer rebates and other incentives to get back market share lost to GM, Hyundai Motor Co., and other competitors. Detroit automakers will probably offer discounts on trucks because of high inventories, he said.

"It'll probably be a pretty good time to buy a vehicle," he said. "Consumers have proved they will respond selectively when prodded."

Automakers don't expect the pace of sales to slow for the rest of the year. GM stuck with its forecast for full-year sales of around 12.8 million cars and trucks, which would be up ten percent from last year.

But some analysts say September's boost will be short-lived because economic worries could still dampen sales. Edmunds.com last week reduced its full-year sales forecast from 12.9 million vehicles to 12.6 million vehicles.

GM's September sales rose twenty percent, led by a thirty-four percent rise in sales of full-size pickups and SUVs. Chrysler's sales rose twenty-seven percent, while Ford's were up nine percent.

Other automakers reporting sales included: