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March was a good month for most of the automakers: U.S. car and light-truck sales rose 13% versus year-ago numbers, making the first quarter of 2012 the strongest for auto sales since 2008.
That's a good sign for the overall economy. Auto sales have been sharply below recent historical trends ever since the economic crisis, as overleveraged consumers and businesses have put off major purchases. While sales still haven't recovered to pre-crash levels, improvements seen in recent months confirm that households and businesses are starting to spend again -- a good thing.
Just as with the economy, General Motors' (NYSE: GM ) recovery remains a work in progress. But the General's sales results in March suggest that its efforts are moving things in the right direction.
Mass-market strength even as gas prices rise
GM's overall sales were up 12% in March, a bit behind the overall market, but as with rival Ford (NYSE: F ) , the headline number doesn't really tell the story. And for GM shareholders, there are several stories worth telling in this month's batch of numbers.
For instance, until recently, GM tended to suffer when gas prices rose sharply, as worried new-car buyers opted for more fuel-efficient import models over GM's longtime strength -- SUVs. But now, while GM's product-line overhaul is still ongoing, it has sufficient strength in fuel-efficient cars to capture many of those sales.
GM's bread-and-butter brand, Chevrolet, posted a 17% increase in sales versus year-ago numbers, and every one of its car models saw a sales increase. The Cruze compact and Malibu sedan continued to post big sales totals, and the subcompact Sonic showed increasing momentum.
Significantly, even the much-maligned Chevy Volt showed newfound sales strength, with its best sales month ever -- exceeding its previous monthly sales record by 50%. Production of the innovative but controversial plug-in hybrid had been suspended because of low sales, but GM President Mark Reuss said on Tuesday that the company would resume Volt production a week earlier than planned.
Work remains as competition picks up
Not all was rosy for GM, though. Buick and Cadillac sales were both down over year-ago totals. Cadillac's problem is a simple one, namely a dearth of product, but the upcoming large XTS and small ATS sedans should help when they arrive at dealers in the next few months.
Meanwhile, though, competition in the mass market is heating up. While Honda (NYSE: HMC ) continues to struggle, Toyota (NYSE: TM ) and Nissan (OTC: NSANY) both saw significant sales jumps -- 15% and 13%, respectively.
Toyota, which also posted its best March results since 2008, saw a huge jump in Prius sales during the month. The new small Prius c, which offers 53 miles per gallon in a package that starts around $19,000, is shaping up to be a much-needed hit for the Japanese giant. The recently redesigned Camry also continued its surprising run, with a 30.5% gain versus last March's numbers, the last before the effects of the tsunami started to be felt.
Nissan's gains may have been goosed somewhat by the company's generous spending on incentives. TrueCar estimates that the company's incentives spending was more than $3,000 per vehicle sold in March, a level far above the industry average and comparable only to spending by GM and Chrysler, long the incentives leaders.
But give credit: It's working. Nissan has now passed Honda for fifth place in the U.S. market, and its midsized Altima was the second-best-selling car in the U.S. in March.
The upshot: a work in progress
Long story short, GM still has work to do, and its hit-or-miss sales results show it. But much is in progress. The replacement for the long-outdated Chevy Impala sedan was shown this week at the New York Auto Show, and it appears to be a huge leap forward. The new Cadillacs are en route and look promising. But Buick is still an evolving brand, and GM's new full-size pickups and SUVs are still a year or more away.
Still, as CEO Dan Akerson's long-term overhaul plan continues to unfold, shareholders have to be encouraged by the progress to date. But the proof of progress will be in GM's bottom line -- and we'll know more on that front when the company releases first-quarter earnings in a few weeks.
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