Good reasons to buy give auto sales 13% boost

DETROIT — Americans found plenty of reasons to buy new cars in September, making auto sales a bright spot in the economy for yet another month.

Total U.S. sales rose 13 percent from a year earlier to nearly 1.2 million. If they stay at that pace, they’ll reach 14.9 million this year. Sales rose for most carmakers, led by big gains at Toyota, Honda and Volkswagen.

Low interest rates, aging vehicles that need to be replaced and appealing new models are the main drivers of this year’s consistently strong sales, says Jessica Caldwell, an analyst for the Edmunds.com automotive website.

“That’s a good combination to get people shopping again,” Ms. Caldwell says. “That’s really what sells cars.”

Record-high gas prices shifted buyers away from trucks toward smaller cars. Sales rose 40 percent or more for the Chevrolet Cruze, Ford Focus, Toyota Corolla and other compacts. Gas prices have jumped 14 percent since July 1, and hit $3.79 per gallon at the end of September, a record for that time of year. Small cars now make up 23 percent of new-car sales, up from 21 percent in July, according to Ford’s top U.S. sales analyst Erich Merkle.

There are several factors that drew buyers to dealerships in September, including record-low financing, new models, aging vehicles and a rise in consumer confidence. Consumer confidence jumped in September to the highest level since February.

Uncertainty about the economy is keeping sales from rising even faster. Some Americans are holding back on major purchases until they see how the budget battle shakes out in Washington, whether Europe can fix its economy and who wins the U.S. presidential election, says Jeff Schuster, senior vice president of forecasting for LMC Automotive, an industry consulting firm.

But car companies remain optimistic about the rest of this year and the first part of next year.

“The positives outweigh the negatives,” says Kurt McNeil, vice president of U.S. sales for GM. “We see continued slow, gradual growth for the entire industry and for us.”

Toyota Motor Corp.’s sales rose 41.5 percent and Honda Motor Co.’s were up 31 percent in September compared with a year earlier, when their inventories were hurt by an earthquake. Honda said sales of the Civic and Accord sedans rose 57 percent. Nissan Motor Co., which recovered more quickly from the earthquake, said its sales fell 1 percent, partly because the company has just begun shipping its new Altima sedan to dealers.

Detroit didn’t fare as well. Chrysler Group reported a 12 percent increase, thanks to strong sales of the Dodge Avenger and the new Dodge Dart small car. But General Motors Co. and Ford Motor Co. sales were either up slightly or flat.

Ford saw a slowdown in sales of the Fusion sedan as it began shipping a new model to dealerships. The Fusion normally makes up 12 percent of the company’s monthly sales. Ford is also losing some customers who used to buy Ranger small pickups. Ford stopped selling the vehicle at the end of last year. Only about half of Ranger buyers are replacing their trucks with Ford products, Mr. Merkle says.

At GM, car sales increased 29 percent, led by the Chevy Cruze compact. Sales of the Sonic subcompact were five times higher than last year. But sales of the Chevy Silverado pickup, GM’s top-selling vehicle, fell almost 17 percent. GM said that was due to a 55-percent decrease in sales to rental companies as the company shifts between 2012 and 2013 models.

Volkswagen AG said its sales rose 34 percent, as sales of the Passat sedan nearly tripled over last year. Discounts helped. Auto buying site TrueCar.com said Volkswagen had the biggest increase in incentive spending of any automaker, up 29 percent to an average of $2,462. Volkswagen is offering zero-percent interest deals on the Passat through October.

Hyundai Motor Co. said its sales climbed 15 percent on strong sales of cars like the Elantra small car, which was up 27 percent.