U.S. Auto Sales Roll On

Sales of new vehicles in the U.S. continued to rise in February, albeit at a slower pace than a year earlier, as the prospect of job cuts and tax hikes amid budget wrangling in Washington appeared to damp car buying at month's end.

U.S. auto sales rose 3.7% to 1.2 million. The rate of sales, adjusted for seasonal fluctuations, equates to a full year of sales of 15.38 million, according to Autodata Corp.

Auto sales have been one of the most consistently positive economic indicators over the past three years, rising steadily from a historic bottoming in 2009, when sales fell six million units below the trend of the previous decade.

Buyers have been steadily returning to the market, many pushed into a purchase by the age of their vehicles, which has reached an average of 11 years, according to Polk, a research firm. This pent-up demand has allowed auto sales to avoid big ups and downs in purchases despite rumblings from other parts of the economy.

Some car makers, particularly Japanese companies that have big market share in the Northeast, said the snow storm early in the month affected sales.

Ford's U.S. sales chief, Ken Czubay, said the underlying strength of the auto industry, driven by low interest rates, new model and pent-up demand should overcome any potential drag from mandatory government spending cuts that are imposed. Full-implementation of the so-called sequestration could cut a half a point of growth off the U.S. gross domestic product in 2013, Ford's senior economist estimated.

Many car-shoppers remain upbeat despite the wrangling in Washington, said Regina Dahm, general manager of Motor City Mini, which opened a new and expanded showroom in Southfield, Mich., last month. "People are shopping and looking at cars," she said. "Our floor traffic doubled in the second half of February, so we feel good going into March and April."

Her family's company, Eitel Dahm Motor Group, saw solid sales performances at its BMW AG, Audi and Porsche dealerships as well, she added.

Still, the chief of Volkswagen of America, Jonathan Browning, said angst over possible job cuts and tax hikes already is affecting consumers, and suggested the pace of auto sales gains may moderate in the months ahead, compared with the solid gains the industry posted in the first two months of 2013.

"The failure to resolve the debate over spending and to have a plan to avoid further protracted confusion surrounding the debt ceiling means we will take a more cautious approach to our market forecast, inventory levels and production planning for 2013."

Mr. Browning said he is sticking with his forecast of 15.1 million new vehicle sales for the year--one of the lowest among industry officials. U.S. sales of the VW brand rose 2.9% in February.

General Motors Co. said its sales rose 7.2%, while Ford Motor Co. saw an increase of 9.3% and Chrysler Group LLC a 4.1% jump. Toyota Motor Corp. reported a 4.3% rise in its U.S. sales last month. Honda Motor Co. said its sales declined 2% and Nissan Motor Co. reported a 6.6% decline, both over a year earlier.

Importantly for U.S. auto makers, sales of pickup trucks continue to rise. GM said sales of its Chevrolet Silverado pickup rose 30% from a year earlier to 41,634 and Ford said its F-series pickups rose 15% to 54,489. Chrysler's Ram brand trucks rose 3% to 23,289. Trucks are high-profit vehicles for the domestic auto makers and growth in the home- building market should help to push up those sales throughout the year.

Full-size trucks, like the Silverado, made up 12.3% of the sales--up nearly 2 percentage points from a year earlier, while buyers purchased fewer small cars as a percentage.

GM sold 224,414 light vehicles last month, followed by Ford with 195,310, Toyota 166,377 and Chrysler 139,015.

Last month had 24 selling days, compared with 25 days in February 2012.

"February was driven by the availability of easy credit, the availability of new models that have come out in recent months like the Ford Fusion," said RBC Capital Markets analyst Joe Spak. "Incentive spending was flat month over month so it doesn't look things are getting irrational."

Mr. Spak said there appear to be few things, such as an unexpected jump in unemployment or a halt to the housing recovery, that could throw auto sales into a ditch.

"There were concerns when payroll takes increased but that was brushed off pretty well," Mr. Spak said. "Gas prices have even moved up and that hasn't had an impact."

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