January Auto Sales Accelerate

The auto industry hasn't just turned the corner. It's starting to accelerate.

In January, U.S. auto sales continued their upward surge, rising 11 percent over a year ago to their briskest pace in nearly four years. At the same time, several auto makers showed new confidence in the American economy by disclosing billion-dollar expansions of their U.S. factories, reported The Wall Street Journal.

On the sales front, Chrysler Group LLC and Volkswagen AG reported increases of more than 40 percent apiece from a year ago, and most other auto makers posted solid gains. General Motors Co. was the only major company to report a decline; its sales fell 6 percent from a year ago, when an incentive binge caused a sales spike.

All told, auto makers sold 913,287 cars and light trucks in January, according to Autodata Corp. The annualized sales pace in January was 14.18 million vehicles, up from December's rate of 13.56 million. It was the highest level since May 2008, when the sales rate hit 14.28 million vehicles a year, and even surpassed the August 2009 pace, when consumers flocked to showrooms for cash-for-clunker rebates, according to figures from Autodata.

The U.S. auto industry was in deep straits in 2009, and two of its largest players filed for bankruptcy. The industry is now one of the leading forces in the U.S.'s economic recovery. Auto makers expressed confidence that sales increases will continue because credit is available to many customers, and the average age of vehicles in use, more than 10 years old, is forcing many consumers to buy new cars.

"The shopping pattern has been much more robust. The availability of credit is much more catering to the buyer than it was 24 months ago," said Al Castignetti, vice president of sales for the Nissan brand in North America. Nissan Motor Co. reported a 10.4 percent increase in January sales over a year ago.

Nissan is in the process of adding 1,200 jobs in Tennessee to expand its manufacturing operations and has plans to add 1,300 more workers. And in the past week, Chrysler, VW and Honda Motor Co. each announced U.S. expansions that would add nearly 2,000 U.S. jobs over the next year.

Ford Motor Co. has said it will add 7,000 jobs in the U.S. this year alone, GM said it plans to add 6,300 jobs through 2015; and Toyota Motor Corp. recently finished hiring 2,000 workers to staff a new plant in Mississippi.

"The positive momentum should continue in the first quarter. Overall economic growth should continue in the 2 percent to 3 percent range," said Jenny Lin, a Ford economist, in a conference call on Wednesday.

The brighter outlook for the U.S. auto industry is becoming a campaign plank for President Obama, whose administration steered GM and Chrysler in and out of managed bankruptcy reorganizations.

Chrysler's January U.S. sales leapt 44 percent to 99,238 cars and trucks, on the strength of its namesake brand. Ford's sales increased 7.3 percent, to 136,294 vehicles, driven by a 60 percent increase in sales of the Focus compact. Ford added incentives in January to help the Focus, which had been piling up on dealer lots at the end of December.

GM's January sales fell to 167,962 cars and light trucks, from 178,896. Without the big incentives it offered a year ago, GM's profitable big pickups lost ground last month and its Cadillac brand declined sharply. Its U.S. market share in January was 18.4 percent, a big drop of 21.8 percent a year ago.

January sales of GM's battery-powered Chevrolet Volt, at 603 cars, were less than half the December total. GM sales chief Don Johnson blamed slow Volt sales on a high-profile U.S. safety investigation into whether the car's battery posed a potential fire risk. U.S. safety officials last month cleared the Volt and said the car poses no unusual risk of fire.

Mr. Johnson said Volt sales were "clearly affected" by the probe and that GM made sure to keep Volt production in line with demand and will "take this one day at a time."

Sales of the Nissan Leaf, a rival electric car, also fell, to 676 in January from 954 in December. Mr. Castignetti attributed the decline to supply constraints.

All three Japanese auto makers reported sales gains as inventories of vehicles finally began to normalize. Toyota and Honda had been struggling for months to restock dealer lots after the March 11 earthquake and tsunami in Japan interrupted parts supplies.

Toyota reported a 7.5 percent increase in January as large marketing efforts behind the new Camry sedan paid off. The sedan posted a 56 percent sales increase over a year ago. Honda sales rose 8.8 percent. Hyundai Motor Co. said its U.S. sales rose 15 percent.

Volkswagen's namesake brand sold 27,209 cars and sport-utility vehicles, up 48 percent. The company said it was the VW brand's best January for sales since 1974, back when the original Beetle was a favorite of America drivers.

Daimler AG's Mercedes-Benz unit said its U.S. sales in January rose 25.8 percent over a year ago, to 21,726 vehicles. Luxury-car rival BMW AG reported its combined U.S. sales of BMW and Mini autos rose 5.8 percent from a year ago to 19,739 in January.