Light vehicle sales in the U.S. auto industry surged 24.3% to 1.07 million units (10.8 million units at seasonally adjusted annual rate) in March 2010. This was driven by an aggressive incentive policy adopted by the safety-recall hit Toyota Motor Corp. (TM) to woo back its lost customers, pent-up demand from the winter storms affected February, economic stability and a weak comparable month (March 2009) mired in U.S. recession.

In absolute terms, this is the best month since August last year, when the U.S. government’s “Cash for Clunkers” led sales to rise 1% to 1.26 million units.

U.S. Automakers

General Motors (“GM”) saw a 20.6% rise in sales to 188,546 vehicles (including discontinued brands Pontiac, Saturn and Hummer). With this, the automaker topped its Detroit peers in absolute terms.

Sales of GM’s core brands — Buick, GMC, Chevrolet and Cadillac — grew 43% driven by strong demand for redesigned vehicles including mid-sized crossovers — Chevrolet Equinox and GMC Terrain — and the Buick LaCrosse luxury sedan. The automaker’s market share remained almost stable at 17.6% compared to 18% in March last year.

Ford Motor (F) lagged behind GM in absolute sales after overtaking its rival as the top automaker in February. The automaker witnessed a staggering 43% rise in sales to 178,546 vehicles. Its market share improved 2.5 percentage points to 16.5%. 

Ford’s car sales were up 53%, utilities 46% and trucks 30%. Among the brands, Ford sales rose 46%, Lincoln 19% and Mercury 26%. Meanwhile, Volvo, which is to be sold to China’s Zhejiang Geely Holding Group, clocked a 17.6% decline in sales to 5,237 units.

Sales at Chrysler (including the Chrysler, Dodge and Jeep brands) fell 8% to 92,623 vehicles despite its considerable incentives, as weak demand for its Dodge models offset better sales for Chrysler and Jeep brands. The automaker’s market share dipped as well to 8.7% from 11.8% a year ago.

Japanese Automakers

Toyota’s sales shot up 41% to 186,863 vehicles despite its largest-ever safety recall of 8.5 million vehicles in recent months. This was fueled by a huge consumer response to big promotions, including cheap leases, zero-percent financing for 5 years and free maintenance for 2 years for return customers on most of its line-up in March. The automaker grabbed a market share of 17.5% during the month, up from 15.5% a year ago.

According to Autodata Corp., Toyota’s incentive during the month increased 46% to $2,310 per vehicle compared with GM’s incentive of $3,174 per vehicle (down 19% year-over-year) and Ford’s incentive of $3,035 per vehicle (down 2% year-over-year).

Toyota saw strong sales of its recalled models, Corolla, Camry and RAV4. Sales of RAV4 more than doubled. Corolla rose 33% and Camry jumped 41%.

Sales at Honda Motor Co. (HMC) surged 23% to 108,262 vehicles, driven by strong demand for minivans and trucks, including the Odyssey minivan, Element, Pilot and CR-V. Its car sales grew 13%, while truck sales surged 38%. The automaker’s market share remained almost flat at 10.2% compared with 10.3% in the prior year.

Nissan Motor has reported a 43.3% rise in sales to 95,468 vehicles. Its market share improved to 9% from 7.8% in the previous year.

Sales at the Nissan Division rose 44% to 85,526 units during the month. Sales of Versa went up 105.1%, Maxima 93% and Altima 26.3%. Meanwhile, sales of Infiniti vehicles shot up 37.3% to 9,942 units. The division reported the best month since August 2008, driven by the launch of the all-new 2011 M sedan.
 
Global Automakers Elsewhere
 
Sales at Hyundai Motors escalated 15.4% to 47,002 vehicles, propelled by strong demand for its newly released Sonata sedan and its Tucson small SUV. However, its market share decreased marginally to 4.4% from 4.7% a year ago.
 
Daimler (DAI) has recorded a 19.3% rise in sales to 20,700 vehicles. Sales of Mercedes-Benz improved 28.3% to 20,023 vehicles, fueled by impressive sales of sporty C-Class, the new ninth generation E-Class and compact SUV — the GLK.

The smart USA division recorded a 53.2% rise in sales to 677 units in March. Daimler’s market share remained more or less the same at 1.9% compared with 1.8% last year.

In March, the U.S. auto industry was no doubt propelled by the incentives offered by several automakers. We fear a dismal situation ahead as the incentives expire, leading to a rerun of the post-Clunkers scenario.

On the other hand, if the incentives are extended further as announced by some automakers including Toyota, it would exert a lot of pressure on the respective automaker’s inventory and profit margins.
Read the full analyst report on “F”
Read the full analyst report on “TM”
Read the full analyst report on “HMC”
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