US auto sales jump 14.2% y/y in January

The US automotive market started the year on a positive note, registering 14.2% year-on-year (y/y) growth in January 2013 sales volumes to 1.043 million units. Although the volumes were below the 1.355 million units sold in December 2012 – traditionally a strong month – the latest monthly performance figures are excellent considering seasonal factors (see United States: 4 January 2013: US market closes 2012 with 9% y/y jump in December, full-year growth at 13.4% y/y).

With some exceptions, almost all of the major automakers realised y/y sales improvements during the month, paced by the top four groups. Toyota and Ford led the way with growth rates of 26.6% and 21.7% respectively, while General Motors' (GM) sales jumped 15.9% to 194,699 units, and Fiat-Chrysler's sales climbed 16.6% to 120,234 units. At 12.8% y/y, Honda's sales were slightly below the average for the industry, but the underperformance was more prominent in the case of Nissan and Hyundai, up 2% and 2.3% respectively. This is startling as Honda, Nissan, and Hyundai closed 2012 with double-digit percentage gains.

Pickup trucks fuelled growth for most automakers – a trend that holds particularly true for domestic companies. GM said sales of its Silverado and Sierra pickups increased by more than 30% each compared to a year earlier, although the automaker's overall truck sales growth was relatively modest at 13% y/y. Sales of Ford's F-series trucks rose 22% to 46,841 units, while the all-new Fusion sedan and Escape compact sport-utility vehicle (SUV) also witnessed strong demand. "Ford is off to a strong start this year, with Fusion and Escape delivering January sales records, and F-Series seeing a particularly strong reception this early in the year," said Ford's vice-president, Ken Czubay. The jump for Chrysler's Ram pickups was 14% y/y, topping 20,000 units in monthly sales and producing its best January results in six years. Toyota sold a total of 157,725 vehicles during January, which included a 27% spurt in the sales of its full-size Tundra pickup trucks. "We all started the year with a little bit of apprehension with the fiscal cliff debates and the new tax rates," said Bill Fay, head of US sales for the Toyota brand. "Our industry again emerged as one of the strong points for the economy."

With a share of 45.9% for the month, market share for the Detroit Three reached its highest level since June 2012. Apart from pickup sales, the Detroit automakers were helped by new model launches. While Cadillac registered growth of 47% y/y to 13,116 units on the back of the ATS, which was also named 2013 North American Car of the Year, Ford's all-new Fusion sedan sold 22,399 units in January, up 65% y/y. Ford's small car sales were up 29% in January versus a year ago, with 23,171 Fiesta, Focus, and C-MAX hybrid models sold, marking Ford's best January small-car sales since 2000. Meanwhile, sales of Ford's Lincoln luxury brand fell 18% because of inventory issues for its newly launched MKZ sedan.

Outlook and implications

The January sales results are indicative of a recovery that is likely to outpace the US economy in the remaining months of the year. Adequate inventory levels, subdued gas prices, attractive incentive programmes, and replacement demand stemming from super storm Sandy have assisted in boosting recent demand levels. Sales volumes were also helped by one selling day more in January 2013 against 24 days in the same period last year. The January results are in line with IHS Automotive's expectations and support the view that auto demand in 2013 will scale a new high. Auto sales in 2013 are likely to be underpinned by an unceasing current of ageing vehicle fleets that need replacing and the easing credit conditions, thus continuing the recent growth trend, albeit at a slower pace.

Inventory levels for the Detroit manufacturers were mixed for the month with a healthy bias. Month-end inventory in the US for Ford was 567,000 units, up 45,000 units over December 2012, with stock split between 176,000 cars and 391,000 light trucks. At GM, inventory increased by 21,000 units to 738,000 units or a 95-day supply. Despite strong sales rates for the month, GM's full-size pickup truck supply crept higher to 234,000 units, up 13,000 over December 2012. GM continues to carry high levels of truck inventory as it prepares for the launch of the new Chevrolet Silverado and GMC Sierra this summer. Both models are crucial to the company's success in a year that is being referred to as "the year of pickups" by many. Chrysler's inventory stood at 411,000 units or a 73-day supply, down from 426,000 units at the end of December.

Although the US remains one of the better performers in the global economy, with the Eurozone debt crisis and the deterioration of growth indicators in emerging markets, the domestic economic recovery is expected to be modest from last year. Auto sales are usually seen as early indicators of economic health and, as such, a solid sales performance in January points to a brighter economic situation, despite the prospect of higher taxes and lower government spending in the coming months. IHS Automotive anticipates that passenger-car sales this year will grow by a further 5.7% y/y to around 7.69 million units, pushing up overall light vehicle sales by 3.7% to 15.1 million units.