For global automakers, all roads lead to the U.S.With Russia struggling, China’s growth slowing and Brazil contracting, global automakers are counting on the United States, where January sales were the best in nine years.
To start the year, sales at General Motors jumped 18 percent while Ford Motor, Toyota and Nissan all beat analysts’ estimates as cheaper gasoline and falling unemployment boosted consumer confidence.
The United States has job growth to drive sales along with lenders willing to loan at low rates to finance cars. Cheaper fuel has also rekindled Americans’ affinity for profitable pickups and sport utility vehicles.
“The Federal Reserve put a lot of money into the system, allowed the stimulus and pent-up demand to work its way through, and it’s finally showing up in the job creation,” said George Magliano, New York-based senior principal economist at IHS Automotive. “After the first quarter of last year, the economy snapped back. We’ve picked up momentum and that’s what showed up in the selling pace.”
The top six automakers all increased deliveries by more than 11 percent compared with the previous January, pushing the annualized selling rate, adjusted for seasonal trends, to 16.7 million. Light-vehicle sales for the month rose 14 percent to 1.15 million from a year earlier, when the coldest January in two decades for the contiguous United States kept shoppers away from showrooms.
January’s U.S. sales didn’t just look good in comparison with last year. Nissan, Honda Motor, Hyundai Motor and Kia Motors reported their best January sales ever in the United States, as did Daimler AG’s Mercedes-Benz and Volkswagen AG’s Audi and Porsche.
It’s a brisk start to a year in which analysts surveyed project sales will rise to 16.9 million light vehicles. That would be the industry’s first six-year streak of growth since at least World War II.
Demand for pickups and sport utility vehicles surged in January, helping drive up total sales 18 percent at GM and 16 percent at Ford, whose F-Series pickup line had its best January since 2004. At GM, sales jumped 29 percent for the GMC truck brand and 20 percent for the Chevrolet brand. Fiat Chrysler’s 58th month of U.S. sales increases were led by the Jeep sport- utility line and Ram’s pickups and work vans.
Shares in Detroit-based GM rose 2.6 percent to $33.98, while Fiat Chrysler Automobiles NV increased 3.3 percent to $13.95 and Ford gained 2.5 percent to $15.65, the highest in almost two months. Toyota’s American depositary receipts were little changed at $131.10, while Honda’s slid 1.1 percent to $31.23.
While the U.S. economy is relatively healthy, it isn’t the only country making progress. India is improving and the United Kingdom is “doing a bang-up job,” said Magliano, the IHS economist. China is still growing, but at a slower rate, with auto sales probably tracking closely with economic growth, he said, and improvement is limited in Japan and Western Europe. Global sales may rise 2.4 percent for the year, IHS estimated this week.
Countries that get much of their income from oil are particularly troubled. Venezuela is facing a currency crisis that led Ford to take an $800 million pretax charge on its business there. Automakers find it hard to sell vehicles and harder to convert the local currency into dollars or euros.
Russia’s auto market will shrink by a fifth this year, Carlos Ghosn, the chief executive officer of Yokohama, Japan-based Nissan and Boulogne-Billancourt, France-based Renault, said in a television interview. Sales of passenger cars and light commercial vehicles fell 10 percent in 2014 to about 2.5 million units, according to the Moscow-based Association of European Businesses.
“It’s already pretty bad,” Ghosn said. “With the forecast we have in 2015, we should be at the end of the tunnel, but we never know.”
In the United States, falling oil prices have led to a more than 40 percent decrease in gasoline prices, according to AAA, the driving club.
“Cheaper gasoline prices put $150 billion in American consumers’ pockets this year, and it makes them feel better,” said Mike Jackson, CEO of Fort Lauderdale, Florida-based AutoNation, the biggest U.S. auto-dealer group.
Lower fuel prices allow American consumers to buy the bigger, faster models they prefer, he said.
“It is a stampede into larger vehicles driven by consumers’ expectations that gas is cheap and will stay cheap,” he said.
Magliano agreed that the more affordable fuel helps, but he cautions that it’s only part of the picture.
“It’s the jobs, it’s the availability of credit and it’s the gasoline prices,” he said. “People are feeling better because of the falling prices of gasoline and heating oil.