DETROIT — As more U.S. buyers head back into auto dealerships, automakers are jostling for their attention with sweetened deals.
The major automakers knocked a little extra off sticker prices in February, giving additional momentum to a recovery in sales that started last year. The good news for buyers is that discounts are likely to continue into the spring, as older models like the Toyota Corolla and Chevrolet Malibu duke it out with newer models like the Ford Focus and Hyundai Elantra.
“Sales rates are starting to exceed expectations. It’s an opportunity to grab sales from others if you’re aggressive enough and you have the right product,” said Jesse Toprak, vice president of industry analysis at , an auto-pricing website.
All the major car companies reported double-digit gains for last month. Improving economic conditions and consumer confidence could mean more gains in the months ahead.
But automakers’ results came on a day when oil again approached $100 a barrel on continued unrest in the Arab world. Rising oil prices could still put a damper on the industry’s recovery, GM chief executive Dan Akerson cautioned on the sidelines of the Geneva Auto Show.
“I don’t think the industry learned a lot of lessons from 2008. They will this time around,” Akerson said of the 2008 spike in U.S. gas prices to above $4 a gallon, which rapidly changed buying habits.
So far, gas prices aren’t having much impact on buying decisions. At AutoNation, the country’s largest dealership chain, president Mike Maroone said the “freak-out point” that changes people’s car-buying behavior is $4.25 to $4.50 a gallon. “We’re still a long ways from that,” he said.
Discounts are one reason for the impressive sales. Automakers had largely been able to wean themselves off deals, which hurt their profits, since the industry ran into financial trouble in 2009. But GM fell off the wagon in January, raising incentives by $400 a vehicle. Competitors followed in February, with Ford, Chrysler, Nissan and Toyota all increasing spending on incentives by 6 percent or more over the previous month, TrueCar estimated.
Chrysler Group offered zero- percent financing for 36 months on the new 200 sedan. GM offered $7,000 in dealer cash on the Cadillac DTS and STS sedans. Toyota put $4,000 on the hood of the 2010 Lexus HS hybrid.
Still, incentives are only part of the story. “A $400 increase doesn’t drive these kinds of share gains and sales gains,” said GM’s vice president of U.S. sales, Don Johnson.
