February sales: Best since the bust

One way to read February: The auto industry is back.

Easier credit and a few new tricks from dealers and automakers put auto sales on their fastest pace -- excluding cash for clunkers -- since August 2008, just before the Lehman Bros. crash and the nation's economic meltdown.

February light-vehicle sales jumped 27 percent over the same month last year. The 13.4 million annual selling rate broke through a four-month plateau in the low-to-mid-12 million range.

And all the growth was retail. Except for Toyota, the large automakers reported a lower fleet mix.

What made it happen?

-- Dealers say manufacturers offered inventive incentives that met changing consumer demand: less cash on the hood, richer leasing and financing deals and more lease pull-ahead deals.

-- Automakers say dealers have sharpened use of new technology for customer relations -- replacing or supplementing mailings with quick-response media such as texting, e-mails, Facebook and Twitter.

"There is a thaw in credit availability," said Adam Jonas, Morgan Stanley's top global auto analyst. "The growth is in lease financing. Someone with a 650 FICO score is now getting approved on a three-year lease."

Jesse Toprak, vice president of TrueCar.com., said dealers were able to react quickly to the easing of credit in February because of new, faster customer-contact technology.

"The last few months, lots of prospects got turned down," he said. When credit availability surged, "salesmen were calling them back quickly."

Economic signs were good, too. Consumer confidence rose last month, and household income grew because of federal tax cuts.

"It's a moon-in-alignment moment," said Paul MacDonald, a dealer-technology adviser and part owner of two Mazda dealerships in Utah.

February's sales rate is the highest since the 13.5 million figure of August 2008, with one exception: the blip of 14.1 million in August 2009, reflecting the government's cash-for-clunkers program.

General Motors showed the biggest gain among major players last month, boosting sales 46 percent from a year ago. U.S. sales boss Don Johnson said GM dealers "are doing an increasingly better job at closing sales." He added: "They are very, very good at responding to their customers, whether it's online, over the telephone or on the showroom floor."

MacDonald said dealers have invested heavily in software to order vehicles and manage inventory and customer contacts.

"They threw their pocketbooks at it at first, but now they are learning to integrate that better, and it's really starting to work," he said. With social media and e-mail tools, "the response time to an event can be same-day rather than weeks for a traditional mailing."

MacDonald said dealers calling customers isn't new. But he said new social media tools "let dealers react more quickly to an event -- today rather than days."

"It's still a face-to-face business," he said. "But how you get there has changed. We have a complete migration away from index cards."

After its February surge, GM last week launched 0 percent financing incentives on ten 2011 Chevrolet, GMC and Buick models.

In February, the industry's overall incentive spending rose 5 percent from January to an average of $2,700 but declined fractionally from a year ago, according to TrueCar.com.

"Average incentives are the lowest for a February since 2007," Toprak said. "The perception of a pricing war and overindulgence of using incentives is exaggerated."

Instead, he said, automakers are using analysis software and experience to design more sophisticated incentives that are less damaging to brand perception and appeal more directly to consumers.

"They are no longer spending as much upfront by offering customer and dealer cash and are pushing [low-rate financing] and leasing programs."

Dealers say new incentives -- many focused on leasing or financing -- are resonating with consumers.

Peter Allen, general manager of Egglefield Ford in Elizabethtown, N.Y., said Ford's latest financing and lease-oriented incentives are better for his customers. "The last three months, Ford Motor Credit has been much more aggressive in leasing, with residuals up and interest rates down," he said. "It's pushing leases on Explorer and Expedition but also on Fiesta, where leases make it competitive with small-cars lease deals from Hyundai, Toyota and Honda."

GM's Johnson said GM Financial, the automaker's new captive finance arm, raised leasing penetration.

Toprak said Cadillac's leasing penetration has risen recently and stood at 40 percent last month -- a big contributor to the brand's 70 percent gain in February.

February's growth was all on the retail side. Retail sales for the seven largest-selling automakers jumped 42 percent to 686,700 light vehicles in February, while fleet sales fell 5 percent to 180,700 units, according to the Automotive News Data Center. For the seven -- which captured 87 percent of total U.S. volume -- fleet accounted for 21 percent of the mix in February, down from 28 percent last February.

Toyota Motor Sales was the only one of the seven automakers with more fleet in its mix, rising to 14 percent, from 13 percent a year ago.

"For the year we will be in the 8.5 to 9.5 percent range," said Bob Carter, Toyota brand general manager. That would be in Toyota's typical range.

All major manufacturers posted double-digit sales gains in February. But with the market so buoyant, only four of the top seven gained market share.

Following GM's 46 percent gain, Toyota Motor Sales soared 42 percent. Nissan North America rose 32 percent, followed by Hyundai-Kia at 32 percent.

But sales increases of 22 percent at American Honda Motor Co., 13 percent at Chrysler Group and 10 percent at Ford Motor Co. were below the industry average, meaning they lost share.

Neither automakers nor analysts saw any evidence that a spike in fuel prices affected February sales.

Said Toprak: "It's a future concern, but it didn't show up in February."

Jamie LaReau, Mike Colias, Donna Harris and Mark Rechtin contributed to this report