Sweet deals, strong sales

DETROIT - The U.S. auto industry's recovery picked up steam last month with all major car companies Tuesday reporting double-digit sales gains.

General Motors Co., Toyota Motor Corp., and Ford Motor Co. sales for the month exceeded analysts' estimates as rising consumer confidence boosted industrywide deliveries to the fastest pace in 18 months.

"GM and Toyota stood out for the month, but there were strong numbers across the board," said Jeff Schuster, director of forecasting for the researcher J.D. Power & Associates. "We're looking at an economy that continues to improve, consumer confidence getting better, and you're starting to see credit and [auto] leasing improve from the end of last year."

The percentage of consumers planning to buy a new vehicle within six months increased to 4.6 percent from 3.1 percent at the end of last year, the Conference Board said in a report last week.

General Motors led the way with a whopping 49 percent U.S. sales jump, compared with February of last year, followed closely by Toyota with a 42 percent gain.

Nissan Motor Co. and Honda Motor Co. had gains of 32 percent and 22 percent, respectively, while Hyundai Motor Co. sales rose 28 percent.

Chrysler Group L.L.C. and Ford showed much smaller increases, but Chrysler sales were still strong with a 13 percent increase, and Ford came in at 10 percent.

The companies said that consumers snapped up cars and light trucks and that sales of new models were strong.

But the sales gains, especially for GM, were juiced by sweeter financing and lease deals. While analysts were not ready to declare a price war - and GM denied starting one - they noted an increase in the deals customers were offered.

The auto-industry website TrueCar.com estimated that automakers raised incentives 5 percent in February compared with January to an average of $2,708 per vehicle. Chrysler, Ford, Nissan, and Toyota all sweetened deals more than 6 percent for the month, the site said.

And the industry's enthusiasm for a fast start to 2011 is tempered somewhat by a rapid increase in gas prices, due to increased demand and to a jump in oil prices amid unrest in the Middle East and Libya.

Also, Toyota's gain, while impressive, was compared with a bad month last year when a string of embarrassing safety recalls had reached its peak.

Still, the gains for February were so strong that Ford's top sales analyst told reporters that the company's sales rate, when adjusted for seasonal differences and projected out for a full year, may be the highest since the government's Cash for Clunkers rebates juiced sales in the summer of 2009.

Don Johnson, GM's vice president of U.S. sales, said GM boosted incentives early in the year to get off to a fast start and to catch competitors off guard.

The automaker started the increases in January by raising incentives $400 per vehicle from December, mainly with low-interest financing and lease deals in Northeastern states. It stuck with the deals in February, leading to sales of more than 207,000 cars and trucks.

Johnson predicted GM would back off on incentives later in the year.