US auto sales rise in January, led by Chrysler, VW

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by DEE-ANN DURBIN and TOM KRISHER

AP Auto Writers

Posted on February 1, 2012 at 11:21 AM

DETROIT (AP) -- U.S. auto sales are off to a strong start this year, continuing the brisk pace from late 2011.

Chrysler had its best January in four years while Ford got a boost from small cars and SUVs. Volkswagen, which wants to aggressively expand in the U.S., reported much higher sales. One sour note was GM, where sales fell.

Analysts are expecting industrywide sales to rise around 7 percent to more than 870,000 for January, kicking off what is expected to be the strongest year for the industry since the recession. Jesse Toprak, vice president of industry trends for TrueCar.com, said U.S. demand continues to grow at a steady pace as the economy improves.

"For the first time in several years, we are starting the year off with a warm and fuzzy feeling," Toprak said.

For all of 2012, auto sales could reach 14 million new vehicles, analysts say, up from 12.8 million in 2011. While that forecast is below the 2000 peak of 17.3 million, it's better than the 10.4 million trough in 2009.

One reason car sales are improving is that buyers need to replace aging vehicles. The average age of a vehicle in America has reached a record 10.8 years. Low interest rates and greater loan availability also spurred demand in January.

Unseasonably warm weather may also have drawn buyers to dealerships, although Ford's U.S. sales chief Ken Czubay said that the weather effect was probably a wash. Frigid weather can also boost sales because older cars may not start during a cold snap, he said.

Chrysler's January sales jumped 44 percent, led by surge in demand for the Chrysler brand. Buyers flocked to the revamped 200 and 300 sedans. Chrysler sold 7,007 of the 200 midsize sedan last month, more than eight times the number it sold in January of 2011. Sales of the Chrysler 300 large sedan almost quadrupled from a year earlier.

Ford's overall sales rose 7 percent. Demand for the Ford Focus compact car rose 60 percent, while sales of the Escape small SUV rose 24 percent. Ford is replacing the Escape with a new version later this year, and sales have been strong for months as dealers offer big discounts to clear out the old models.

General Motors reported a 6 percent decline for the month, saying demand for its trucks and crossovers fell. GM also offered fewer discounts than it did last January. TrueCar estimated that GM's incentives were down 16 percent to $3,095 per vehicle.

Sales weakened for crossover SUVs like the Buick Enclave and GMC Acadia. Pickup sales fell 6 percent.

But GM's car sales rose 13 percent, led by the new subcompact Chevrolet Sonic and the Chevrolet Cruze. Sales of the Chevrolet Volt electric car nearly doubled to 603. GM announced early in January that it will retrofit existing Volts to make them less prone to fires after a severe crash.

Analysts expect that new car and truck sales hit a seasonally adjusted annual rate of 13.5 million vehicles last month. That follows an annual rate of 13.56 million in December and 13.63 million in November.

The industry faces some challenges. Consumer confidence fell in January after two straight months of big gains as Americans worried about incomes, gas prices and business conditions. Unemployment is at its lowest level in nearly three years, but it's still 8.5 percent.

"Overall, the economy's not in a good place yet, but I think consumers are reacting to the conditions much more favorably than expected," said Jeff Schuster, senior vice president of forecasting for LMC Automotive, an industry consulting company in Troy, Michigan.

Other companies reporting sales Wednesday:

-- Volkswagen of America reported a 48 percent rise in U.S. sales, led by the Jetta and Passat sedans.

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