By Danni Santana
Nasty weather depressed U.S. auto sales in February, yet did little to keep Americans from buying expensive gas-guzzlers, a sign that consumers continue to benefit from an improved economy and lower gas prices.
Automakers performed worse last month than expected due to snowstorms up and down the East Coast. Sales in the U.S increased just 5.3 percent compared to the same month last year, falling short of the 8 percent increase projected by analysts.
The annualized sales pace – a monthly measure used to estimate sales output over a 12-month period– fell from 16.6 million in January to 16.2 million last month, according to AutoData. The drop halts momentum gained in auto sales, dating back to the final months of 2014 where the rate never fell below 16.3 million.
“Bad weather is one reason why sales dropped. But, we might soon be at the point where people don’t have the same appetite for new cars like they had after the end of the recession,” said Peter Morici, former director of the office of economics at the U.S. International Trade Commission, now a professor at the University of Maryland.
“Luckily for auto companies, we’re seeing a shift towards trucks and it’s making up the difference in revenue because they cost more,” he added.
Of the 1.2 million vehicles sold in February, 54 percent were light trucks, a direct effect of lower gas prices and the continued trend of Americans favoring pick-up trucks and SUVs over passenger cars.
General Motors and Toyota, among the standouts in an otherwise disappointing month for the auto industry, reported over 20 percent increases in truck sales last month compared to last year. Both increased overall sales by 4.2 percent and 13 percent respectively.
Other auto dealers saw modest gains as well. Nissan increased its sales 2.7 percent. Chrysler improved by 5.6 percent and Hyundai made out 7 percent higher themselves. Results just weren’t as high as economists projected.
Ford Motor, on the other hand, fared worse than any automaker, reporting a 2 percent sales decrease. The company has been in transition since the rollout of their new F-150 last year, due to insufficient inventory of it.
“The Northeast got covered with snow. Sales numbers are seasonally adjusted for those reasons so I’m not too worried about the market,” said Russell Price, senior economist at Ameriprise Financial, Inc. “February isn’t a big month for any market whether we’re talking housing starts or auto sales.”
Price predicts 16.5 million cars will be sold. If his prediction holds, it would be the largest output by automakers since 2006. The current sales pace of 16.2 million would be considered a down year compared to the 16.4 vehicles sold last year.
Economists, however, are confident auto sales will fare well in 2015. Higher consumer confidence, stable gas prices and an economy that continues to add 200,000 jobs a month will all but guarantee it. So too will the end of winter.