U.S. light-vehicle sales rose 8 percent to nearly 1.4 million in April, with strong retail sales and pent-up demand adding momentum to the industry’s spring thaw.
Among major automakers, Nissan Motor Co., Chrysler Group and Toyota Motor Corp. set the pace with solid double-digit gains aided by redesigned crossovers and light trucks.
The annualized sales rate, adjusted for seasonal trends, increased to 16.1 million from 15.2 million a year earlier, but still fell just short of projections. In March, the SAAR was 16.4 million -- the best showing since November 2013 and among the highest rates since early 2007.
“Sales momentum from March rolled into April pushing the industry to its best back-to-back monthly sales pace since fall of 2007,” Bill Fay, Toyota division group vice president and general manager, said in a statement.
The SAAR has now topped the 16 million mark four out of the last nine months, and analysts say the industry remains on track to generate U.S. sales of 16 million or more for all of 2014.
Steven Szakaly, chief economist for the National Automobile Dealers Association, said low interest rates, the introduction of new or redesigned models and improving housing and labor markets continue to bode well for U.S. light-vehicle sales.
“The broader economy is very strong,” Szakaly said.
Automakers said retail sales remained strong in April, offsetting sluggish fleet deliveries, which remained weak as major rental agencies dialed back on purchases.
Incentives pave way
Automakers also hiked new-vehicle incentives in April to extend the momentum from March, when sales rose 6 percent, analysts say.
TrueCar.com estimates April incentives averaged $2,751, an increase of 9 percent over April 2013 and 1 percent above March 2014.
"The pricing/incentive environment appears more competitive when you take into account juiced residuals, extended maturities, dealer stair-steps and pulse loans," Morgan Stanley analyst Adam Jonas said in a report Friday after April sales were released. "April was kind of disappointing and if we don’t see the SAAR hit a mid to high 16 million unit rate by May or June you can pretty much write off the year in terms of volume surprise."
Jonas said a decelerating or stalling SAAR "at a time when automakers are seemingly adding more and more capacity doesn’t bode well for industry profitability."
And if Japanese automakers continue to focus on share at the expense of pricing, Jonas warned "the value of SAAR will decline significantly even in a rising SAAR environment."
Barclays analyst Brian Johnson on Friday trimmed his forecast for 2014 light-vehicle sales to 16.1 million from 16.2 million units.
"Although the industry remains healthy, with financing still available and with the economy supportive, we believe underlying demand has normalized and we lack the deep well of pent-up demand necessary to achieve SAAR upside to 17 million units," Johnson said.
Light trucks lead way
Overall, light trucks led the industry's U.S. sales gains last month, rising 13 percent, while car demand edged up 3 percent. Among segments posting the biggest gains were subcompact cars, SUVs, premium crossovers and compact luxury cars.
Deliveries were helped last month by pent-up demand after severe winter weather in January and February forced some consumers to delay purchases.
“Retail demand was steady in April, and truck sales and transaction prices were especially strong,” Kurt McNeil, General Motors’ head of sales operations, said in a statement. “As we expected, the economy continues to strengthen.
U.S. light-vehicle sales have now advanced 3 percent to 5.14 million this year.
Sales rose 18 percent at Nissan Motor, 14 percent at Chrysler Group and 13 percent at Toyota.
GM battled through its recall crisis for a second straight month to record a 7 percent gain. Hyundai also advanced, while Ford Motor Co. fell 1 percent in posting its third monthly decline of the year.
Nissan Motor set an April U.S. record with 103,934 units sold, with car deliveries jumping 24 percent and light truck demand rising 11 percent. Sales rose 19 percent at the Nissan brand and 17 percent at Infiniti.
