Auto sales rise, but gas prices may test Detroit recovery

Auto sales rose 27 percent from February 2010, but gas prices have also been rising. At a minimum, higher gas prices could affect car-buying preferences.

Paul Sakuma/AP
A customer (l.) and a salesman, right, look at a new 2011 Dodge Caliber Mainstreet on display a dealership in Burlingame, Calif., on Feb. 28.

Americans bought nearly 1 million cars and pickup trucks in February, as Presidents Day bargains and an improving economy trumped ice and snow on the way to the dealership.

In all, auto sales rose 27 percent from the same month a year before, with General Motors posting particularly strong gains due to sales incentives.

But the month also brought high gasoline prices, raising questions about how the industry's recovery could be affected if Middle East turmoil keeps gas prices high. Potentially, higher gas costs could slow the economy – including in auto sales – by crimping consumer spending power.

Nationwide, the average cost of a gallon of regular gas stands at $3.38, up from $3.10 a month ago, according to AAA's Fuel Gauge Report.

At a minimum, higher gas prices could affect car-buying preferences. Ford Motor Co., for one, is already touting fuel economy as a key selling point.

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“With oil nearing $100 per barrel and gasoline prices continuing to rise, consumers’ consideration for fuel economy once again is taking top billing,” Ken Czubay, a Ford vice president, said in a statement accompanying the firm's sales figures Tuesday. “Ford’s fuel-efficient, high-quality vehicles are winning customers nationwide," with sales especially in the East and California, he said.

Toyota saw sales of its gas-electric hybrid cars, such as the fuel-efficient Prius, rise 50 percent compared with February 2010.

Still, the rising gas prices come after a period in which many car buyers shifted away from sedans and back toward pickup trucks and SUVs. For February, sales of "light trucks" (including SUVs) represented 51 percent of the market. A year ago it was cars that held the edge, with light trucks holding 49.5 percent of the US market.

GM led major carmakers with a 49 percent sales jump compared with February of last year, grabbing back a clear lead over Ford and Toyota in US market share.

Overall though, US and European brand names lost some ground to Asian carmakers, which held 46.3 percent of the US market in February. The combined tally for GM, Ford, and Chrysler was 46 percent. European brands slipped just below 8 percent of the market in February.

Sales rose 42 percent at Toyota, 32 percent at Nissan, 28 percent at Hyundai, and 22 percent at Honda. Chrysler sales were up 12 percent, and Ford's rose 13 percent, according to company reports tracked by Ward's Automotive.

The "true cost" of incentives offered by GM in February totaled $3,849 per car, estimates, a provider of automotive information. Among five other major automakers, the next highest were Chrysler at $3,124 per car and Ford at $2,837.

For now, many analysts point to a solid rebound, with car sales perhaps headed above 13 million this calendar year, after roughly 11.5 million in sales in 2010.

"Strong sales gains make it clear that the recovery is continuing and potentially setting things in motion for a strong summer buying season," senior analyst Karl Brauer said in a note on the sales numbers Tuesday.

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