Market rebound continues; Ford, Hyundai, Kia, Subaru sales advance in Feb.; Toyota, Honda slip

Improving inventory helped U.S. sales at Ford Motor Co. jump 22 percent in February while Hyundai, Kia and Subaru advanced for the seventh straight month, signalling the market recovery remains steady even amid some economic hurdles. Volume dropped for the second consecutive month at Toyota Motor Corp. on continued tight supplies.

U.S. light-vehicle sales overall rose 9.5 percent to 1.14 million last month, according to a preliminary tally from LMC Automotive, well above forecasts, with sharply higher fleet deliveries once again offsetting flat retail volume.

The seasonally adjusted annual rate of sales hit 15.19 million last month, Motor Intelligence said, well ahead of the 14.4 million to 14.6 million projected by analysts. The latest SAAR reading is down from January's 16.21 million rate but a sharp rise from February 2022's 13.96 million pace.

In another positive sign, the daily selling rate was estimated at 47,700 units last month, LMC Automotive noted, up from 43,900 in January.

"Given the headwinds of sky-high average transaction prices, lingering inventory shortages for some automakers, and economic uncertainty, February’s results surpassed expectations and can be considered an encouraging outcome," LMC said Thursday.

Retail sales last month totaled around 928,000, while fleet accounted for about 217,000 deliveries, representing around 19 percent of total volume, the highest share since March 2020, LMC said. Several automakers face a backlog of commercial, government and rental fleet orders as a result of the microchip shortage that prompted many to prioritize more profitable retail volume.

LMC, citing the stronger than expected February results and continued strong fleet demand, said it raised its outlook for U.S. light-vehicle sales in 2023 to 15 million from 14.9 million, in line with outlooks from General Motors and Toyota.

"The economy is also stronger than expected at the start of the year, as consumers remain resilient in their spending and the labor market continues to be steady," LMC said. "This could push the timing of a mild recession to later in 2023."

Ford division sales gained 23 percent to 150,218 while Lincoln deliveries rose 4 percent to 6,159 during the month. Ford's electric vehicle deliveries rocketed 68 percent to 3,523.

It was the third straight monthly gain for the Ford and Lincoln brands.

The Ford division's biggest sellers all racked up double-digit gains: F-Series, up 22 percent to 54,995, including 1,336 Lightning EV pickups. Bronco SUV deliveries more than doubled to 12,113. Sales of the Explorer doubled to 19,174 and Maverick pickup volume jumped 89 percent.

Ford doesn't release details on fleet shipments but TrueCar estimates the automaker's commercial, government and daily rental business rose 41 percent to some 45,630 vehicles last month.

Sales slipped 2.4 percent at Toyota Motor last month, with volume off 3.6 percent at the Toyota division but rising 6.1 percent at Lexus, snapping a stretch of 12 straight monthly declines at the luxury brand.

The Toyota brand's top sellers posted mixed results in Feb.: Camry, up 55 percent; Corolla, up 7.7 percent; RAV4, down 13 percent: 4Runner, down 50 percent; and Highlander, off 18 percent. Combined sales of the Tundra and Tacoma pickups rose 20 percent to 27,378.

Toyota said it had 134,361 cars and lights trucks in U.S. dealer inventory, at ports or in transit at the close of February, up slightly from 130,315 at the end of January and 110,674 a year ago.

Honda Motor Co. reported a 1.4 percent decline in February results, with the Honda division down 3 percent but Acura volume rising 12 percent, its second straight monthly gain.

Three of the Honda brand's five biggest sellers posted double-digit declines last month: Accord, down 18 percent; CR-V, up 5.9 percent; Pilot, down 11 percent; Civic, up 2.3 percent; and HR-V, down 37 percent.

A Honda spokesman said the company ended February with roughly 33,000 cars and light trucks on the ground, or just a 12-day supply.

Honda said sales of several redesigned core models — CR-V, Accord and Pilot — are still temporarily constrained by supply and logistics, with vehicles now heading to dealers with an anticipated boost to March deliveries. 

Deliveries at Hyundai last month rose 8.8 percent to 57,044, a February record, the company said, with retail sales rising 1 percent to 52,932, and fleet accounting for 7.2 percent of overall volume, or 4,112 units.

Hyundai said Wednesday it ended February with 54,156 vehicles in U.S. stockpiles, up 20 percent from 45,158 at the close of January and 190 percent from 18,621 a year earlier.

"We’ve got really good momentum in a very, very challenging year,” said Randy Parker, CEO of Hyundai Motor America, referring to the unfavorable impact of higher interest rates on consumer financing and the ongoing challenge of sporadic inventory. “We’re not quite back to normalcy at this point in time. Our strategy is to continue to focus on retail and support our dealer partners, but as production continues to improve, we will support our fleet channel."

Volume rose 24 percent to a February record of 60,859 at Kia, with major gains for the Forte, Sportage, Sorento, Telluride and Carnival.

Eric Watson, vice president of sales operations at Kia America, said rising production and inventory levels are allowing the automaker to "fully capitalize" on demand.

At Subaru, February volume rose 2.1 percent. Mazda deliveries rose 8.8 percent to 30,639 in February for the company's fifth straight monthly increase. The company said it had a 20-day supply of vehicles, or 24,215 cars and light trucks, as of Feb. 23.

Genesis also set a February record with U.S. sales rising 21 percent to 4,208 on sharply higher crossover deliveries and the new GV60 electric crossover.

Volvo on Friday reported a 36 percent increase in February sales, its fifth straight monthy gain. The rest of the industry reports U.S. sales on a quarterly basis.

While pent-up demand remains strong in the wake of chronic inventory shortages, higher interest rates, rising new-vehicle prices and falling used-vehicle prices are weighing on retail volume, analysts say.

"We have diverging markets today," said Charlie Chesbrough, senior economist at Cox Automotive. "New inventory is slowly stabilizing while used supply is falling. With many affordability-seeking vehicle buyers leaving the new market for the used, dealers may find they have too little used inventory, and price declines may reverse. And [automakers] may find they have too much new-vehicle inventory and be forced to be more aggressive with incentives to boost sales."

Cox Automotive on Wednesday estimated industry stockpiles rose by 750,000 units, or 71 percent, from a year earlier, to about 1.79 million vehicles by mid February.

Honda, Toyota, Lexus, BMW, Subaru, Kia, Porsche and Land Rover had the tightest supplies last month, Cox Automotive said, while Jeep, Volvo, Buick, Chrysler, Dodge, Infiniti and Ram had the most abundant stockpiles.

J.D. Power-LMC Automotive estimates retail inventory stood at 1.22 million units in February compared to 830,000 a year earlier and 2.17 million in February 2021.

"Improving vehicle availability is allowing more retail and fleet customers who have been waiting on the sidelines to finally buy a new vehicle," said Thomas King, president of the data and analytics division at J.D. Power. "Availability for retail customers is improving but remains extremely low, which is keeping prices and dealer profitability well above historic levels."

With supplies still tight and incentives low, new-vehicle transaction prices continue to rise, with the average price reaching a February record of $46,229, a 4.8 percent increase from a year earlier, J.D. Power-LMC Automotive said.

The average incentive per new vehicle last month was expected to reach $1,335, up from $1,275 in February 2022, J.D. Power said. Incentive spending as a percentage of average MSRP was expected to fall to 2.8 percent, J.D. Power said, down 0.1 percentage point from February 2022. TrueCar estimates incentives fell by $135 from February 2022 to $1,522 last month, but rose 9 percent from January's $1,396 level.

• There were 24 selling days last month, the same as February 2022.
• The average incentive spending per light truck was projected to rise $73 from a year earlier to $1,339 in February, J.D. Power said, while the average discount on cars was expected to total $1,320, up $9 from a year earlier.

Carly Schaffner contributed to this report.