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SUV and Truck Demand Drives GM and Ford U.S. Sales in February

Ford's 2017 F-Series Super Duty truck.Ford's 2017 F-Series Super Duty truck.
Ford's 2017 F-Series Super Duty truck.Courtesy of Ford

February U.S. auto sales, an early-month indicator of consumer spending, fell slightly but remained strong as pickup trucks and SUVs continued a robust showing based on the first three automakers that reported on Wednesday.

General Motors (GM), the top automaker in the U.S. market by sales, said the industry will show a 1% decline, but still post a robust 17.5 million in sales on a seasonally adjusted annualized basis. That is less than the 17.7 million expected by 38 economists polled by Thomson Reuters.

GM beat most analysts’ expectations with a 4.2% gain in new vehicle sales.

Ford Motor Co., No. 2 in the U.S. market by sales, said sales declined by 4%, but still beat most analysts’ expectations. Sales for its F-Series pickup trucks rose 9%, SUVs were up 6%. Ford’s car sales fell 24% from a year ago, the automaker said.

Nissan Motor Co. also beat expectations, showing a 3.5% gain, led by a 54% surge for its Rogue small SUV.

Consumer discounts, which cut into corporate profits, rose in February, third-party industry watchers said, but the average new car selling price also was higher.

Shares in the Detroit automakers, General Motors, Ford Motor, and Fiat Chrysler Automobiles (FCAU) all rose as the broader market soared more than 1%.

However, J.D. Power pointed out that the percentage of consumer discounts to the average selling price was 10.3%. It was the first time the measure topped 10% in February since the industry’s worst year in 2009, J.D. Power said.

GM said retail sales for trucks and crossovers were up 18% and 15%, respectively. For its primary pickup, the Chevrolet Silverado, total and retail sales both jumped 17%, its best showing in February since 2007.

Toyota Motor Corp, No. 3 in U.S. sales volume, suffered a 7.2% drop as sales of the company’s best-selling model, the Camry sedan, dropped 15%.

Fiat Chrysler Automobiles sales fell 10%, as its largest volume Jeep SUV brand dropped 15%.

Honda Motor sales rose 2.6%, helped by its trucks and SUVs, gaining 12% from a year earlier.

Cautionary Notes From Analysts

Analysts pointed to caution flags in the latest results, including discounts that hit 10% of the average selling price for February, according to three companies that track vehicle pricing.

“With the industry at 10 percent you are in a push market,” said Mark Wakefield, head of the North American automotive practice for consultancy AlixPartners. “This is top cycle stuff.” In a push market, manufacturers try to unload vehicles, rather than respond to the pull of consumer demand.

The challenge now for automakers is to avoid over-producing vehicles or launching a price war that could undermine profits, especially as rising interest rates make it more expensive to subsidize loans and leases, Wakefield said.

“It’s that fine balance,” he said. “How much can I push the boundary without prompting a reaction that pulls all of us down?”

The tension surfaced in another round of sniping on Wednesday between GM and Ford over which one was more dependent on discounts to prop up pickup truck sales.

Updated: This article was updated at 2:30 pm ET with more monthly sales results.