Smaller, fuel-efficient cars powered total vehicle sales in March, bolstering the resurgent American economy and accelerating the auto industry.

Chrysler sold more than 163,000 vehicles last month, leading the pack with a 34 percent increase compared to March 2011. The automaker, controlled by Fiat SpA, was the only member of the “Big Three” to exceed analysts’ expectations, according to Bloomberg. Ford reported its best March figures in five years, while General Motors’ sales increased by nearly 12 percent, after selling more than 100,000 vehicles that offer 30mpg.

In February 2009, the US economy slashed more than half a million jobs and car manufacturers hit rock bottom, selling an annualized rate of less than nine million cars. Since then, the automotive industry has risen from its ashes.

Carmakers sold more than 14 million vehicles, when annualized, for the past three consecutive months, a trend that will likely continue, said analysts. Booming sales are boosting the economy and are fueled on gasoline that is costing drivers nearly $4 a gallon, a 25 percent increase from the same month a year ago.

“The March results reinforce that the industry is regaining momentum,” said Tom Libby an automotive analyst at Polk. Two main influences including easier credit and high gas prices have buoyed sales. “Fuel economy and gas prices run counter to what people think, but these are actually helping the industry.”

Data on convertibles, an indicator that increases with higher frequency of sunny days, has not increased, mentioned Libby. Weather, therefore, has not caused an aberration in the market; gains in autos are genuine.

Consumer confidence, which peaked in March, and decreased unemployment, played key roles in the 1.4 million light vehicle sales reported last month. The 12.7 percent year-on-year increase resulted in the best March in four years and provided a positive harbinger for the industry, reported

“The fact that March is one of the strongest months is really a litmus test for what is going to happen in 2012,” said Jessica Caldwell, senior automotive analyst for “If we have a big number in March, we will continue to be able to post good numbers throughout the year.”

Some were less optimistic about March. Total vehicle sales, while strong, still fell short of analysts’ estimates. With sales of over 15 million in February, car sales fell off in March. But February’s sales “should be read with an asterisk,” said Libby.

The 29th day of February, he said, put sales over 15 million. Without that “Leap Day,” sales for the past two months would have been more in line.

Cheaper credit is helping buyers.

In March, the average credit score dropped for those buying cars, said Caldwell and Libby, and more people than ever are able to finance their purchases with cheaper credit.

A divergent view holds that monetary policy is hampering auto sales. “I think if lenders could get more interest on their loans, they’d lend out more. At near zero interest rates,” Robert Brusca, president of Fact & Opinion Economics, said. Adding that car sales have not reached their potential. “You get a restricted supply of credit, not an increased supply of credit. If the fed let interest rates float up, you will probably get more lending. Automobiles are a credit industry. If you can’t get credit you can’t buy a car.”

Fed Chairman Ben Bernanke has repeatedly stated that he will keep interest rates near zero depending on how well the American economy fares throughout 2012.

A big test will come Friday when March’s unemployment rate is released. There are some risks, said Brusca, but “car sales could really ramp up if the unemployment rate goes down.”

Comments are closed.