The nation's consumers still feel wealthy enough to buy new cars and light trucks.
February auto sales beat industry expectations. U.S. light-vehicle sales fell 9.7 percent last month from an extraordinarily strong performance in February 2000. This was the second highest February total in the last 10 years.
In month-to-month comparisons, Automotive News uses actual sales with no adjustment for the number of selling days. There were 24 selling days in February 2001 and 25 days a year ago.
Industry sales analysts are puzzled by the unexpected willingness of consumers to spend heavily on big-ticket vehicles in the face of an economic slowdown. The analysts scratch their heads and speak of tangible and intangible factors.
On the tangible side: Incentive spending increased slightly in February, fostering vehicle affordability.
On the intangible side: Despite recent declines in consumer confidence, new-vehicle buyers may still feel flush because of gains in household net worth during the last decade.
'From an economic and consumer standpoint, the mixed signals are somewhat perplexing,' said Paul Ballew, General Motors general director for market and industry analysis. 'We need to get into the spring selling season to get greater clarity.'
An anticipated interest rate cut in March and a proposed federal tax cut could further bolster the industry this year, said Jamie Jamieson, vice president of marketing and sales for the Chrysler group of DaimlerChrysler.
'It's stronger than we predicted,' Jamieson said. 'If this continues to push out much further, everyone will be re-evaluating what the year will do.'
Industry forecasts are unchanged with 2001 light-vehicle sales expected to break 16 million units, down from a record 17.4 million last year.
Last week, GM and Ford Motor Co. announced second-quarter production cuts, reflecting expectations that sales will continue to be weaker than a year ago. GM production will decline, to 1.3 million units in the second quarter, down 17 percent from last year.
Ford's second-quarter build will drop 5 percent, to 1.25 million units, down 5 percent from a year ago. Ford added 10,000 units to its first-quarter schedule last week, but first-quarter production will be 16 percent lower than last year.
February car and light-truck sales in the United States totaled 1,358,702 units, a decline of 9.7 percent from last year.
Car sales fell 6.8 percent, and light trucks were off 12.8 percent.
February sales declined for GM, Ford, the Chrysler group and Toyota Motor Sales U.S.A. Inc.
Results at GM and Ford included slightly more deliveries to rental fleets than a year ago. GM sold 12.5 percent fewer cars and 13.8 percent fewer trucks than in February 2000.
At Ford, sales of the Ford Explorer were off 31.9 percent last month. The company also expects a decline in March as it slowly steps up production of the redesigned 2002 model. In addition, the Explorer still may be feeling the effect of the recall of 6.5 million Firestone tires, most of them on the Ford sport-utility.
February sales of the Ford Taurus and the Mercury Sable mid-sized sedans rose, reflecting increased fleet sales, said George Pipas, Ford spokesman. Ford expects fleet deliveries to represent about 26 percent of total sales in the first quarter of 2001, compared with 24 percent in the period a year ago, Pipas said.
The Chrysler group's U.S. sales dropped in February but improved over January, Jamieson said.
But Chrysler's minivans are in the center of a major market battle. Minivan sales fell sharply at Chrysler, GM, Ford and Toyota in February. Sales of the Honda Odyssey held steady given the loss of a selling day this year.
'We're doing extremely well in the top half of the minivan market,' Jamieson said. Sales of the Chrysler Town & Country minivan climbed 26.8 percent in February. 'The weakness has been in the center of the market,' Jamieson said. The Dodge Caravan/Grand Caravan was off 38.7 percent last month.
In March, dealers begin selling two new mid-range minivan models, the Chrysler Town & Country EX and the Dodge Grand Caravan EX, to help stem the decline, Jamieson said.
GM blamed slumping minivan sales on high Chrysler incentives and the growing number of car-like sport wagons in the market.
Among Asian automakers, Honda, Hyundai, Kia and Mazda posted gains in February.