US Auto Sales Up In April

DETROIT, May 1 Reuters reported tha car and truck shoppers gave a boost to U.S. automakers in April, as the industry reported a 3 percent increase in monthly sales on Wednesday amid a healthy economy, a flurry of incentives and new models.

April's sales hit a seasonally adjusted annual rate of about 17.4 million vehicles, the highest so far this year. Automakers said incentives helped push the market, while economic factors such as low interest rates and growing personal incomes drove the gain.

"I would put the majority of the credit on the back of the economy, but I would put a very important supporting role nomination in for pricing and affordability," said Paul Ballew, head of industry analysis for General Motors Corp.

GM said its sales rose a surprising 12.4 percent on demand for its trucks, and the world's largest automaker said it was boosting second-quarter production. But GM also warned its prices would fall more than expected in the second quarter.

The Chrysler arm of DaimlerChrysler AG said its sales rose 2.8 percent on healthy sales of its Ram pickup and its sport utility vehicles, including the Jeep Liberty and Grand Cherokee.

The one exception to the trend was Ford Motor Co., which said sales fell 8 percent, due entirely to declines in orders from businesses, rental-car agencies and other fleet buyers. Ford executives said sales to retail customers were equal to those of a year ago.

The results exclude foreign brands and heavy trucks, and the percentage changes are based on a daily sales rate.

The strength of new vehicle sales, which account for about 20 percent of U.S. retail sales, has mirrored other signs of vigor in the U.S. economy. While surveys showed a slight decline in consumer confidence last month, they also suggested Americans were still willing to buy new cars, homes and appliances.

FIGHT FOR MARKET SHARE

Experts inside and outside the auto industry expect consumer spending to remain steady or decline slightly in coming months, since consumers kept buying through the recession last year.

"Consumers continue to tread lightly as economic growth rolls along at a steady but slow pace," Jim Press, head of Toyota Motor Corp.'s sales arm, said in a statement.

Thanks to a raft of cash rebates, cheap loans and lease deals, U.S. auto industry sales had fallen in the first quarter by far less than once anticipated -- just 3.3 percent. That decline had mostly come from cuts by businesses and rental-car agencies; automakers have said sales to retail customers had been flat to down slightly so far this year.

Much of the discounting has come from Detroit's Big Three, although some smaller import automakers have resorted to large rebates or cheap loan deals as well. Incentives averaged about $1,750 per vehicle in March, but the Big Three offered more than $2,100 per car or truck, according to Autodata.

GM warned on Wednesday that the prices it commands for vehicles would decline in the second quarter by 1.4 percent to 1.6 percent. It said the decrease would come mostly from lower-priced fleet orders and leasing, but part would come from incentives in full-size pickups.

"Certainly the overall temperature of the industry has gone up, and we have to remain competitive," Ballew said. "It's a very price-driven market, and we're all wrestling with it."

With labor contracts that make it expensive to idle plants, the Big Three have chosen to fight for market share rather than profits. In addition to incentives, analysts also say a flood of new models, especially from foreign automakers, has drawn more shoppers to dealerships.

"The capacity situation, globally and in this country, will not permit a sea change in vehicle pricing," said Ford sales manager George Pipas.

Foreign automakers also mostly reported higher sales. Toyota said its sales were up just 0.3 percent, while Honda Motor Co. Ltd. said sales were up 1.1 percent. Nissan Motor Co. Ltd. said its sales rose 14.8 percent, thanks to its Altima sedan and its Infiniti luxury brand.

Hyundai Motor Co. Ltd. said its sales rose 13.8 percent, while Mitsubishi Motor Corp. (7211.T) said its sales were up 8.4 percent.