Is Cold Weather Bad for Car Sales?

Two of the big three U.S. automakers had a bad January followed by a bad February. Both are blaming the weather.

Mar 5, 2014 at 2:00PM

While a positive for sales of lip balm, hot chocolate, and those hats that look like an animal, the impact of extreme winter weather is not as clear for the auto industry.

Ford (NYSE:F) and General Motors (NYSE:GM) are blaming bad weather for slow January and February U.S. car sales. But that poor weather did not seem to affect Chrysler, which had improved sales for the month.

Chrysler reported that its sales grew by 8%, giving it the best January the company has had since 2008. In reporting the numbers, the company even took a swipe at its competitors.

"The bad weather only seemed to affect our competitors' stores as we had a great January with sales up 8% and achieved our 46th consecutive month-of-year-over-year sales increases," said Head of U.S. Sales Reid Bigland in a press release.

Chrysler continued that momentum in February, reporting an 11% increase and the best February sales the company has had since 2007, and Bigland actually credits the poor weather for helping. "The severe weather has been ideally suited for our legendary Jeep 4x4 capability as Jeep brand sales were up 47% and the brand had its best February sales ever," he said in the release.

How bad were Ford's sales?

The weather giveth, and the weather taketh away. In January Ford's U.S. sales were down 7% from a year ago.

"Given the difficult weather in our largest sales regions, we are fortunate to have held in at retail as well as we did," said John Felice, Ford vice president, U.S. marketing, sales and service, in a press release. "In areas where the weather was good, such as in the West, sales were up. The poor weather also had an impact on the timing of some of our fleet deliveries."

In February, Ford sales were down 6% from a year ago, but the company sees reasons to be hopeful.

"Sales surged in the final week, providing us momentum after a slow start to the month," said Felice via press release. "Ford Fusion continued its strong retail sales performance in the West, outpacing the mid-size sedan segment. F-Series and Lincoln also continued to perform well."

How bad were General Motors' sales?

General Motors saw its total U.S. sales plunge by 12% in January, which it blamed at least partially on the weather.

"Historically, January is the industry's lowest sales month of the year. Extreme winter weather in the South, Midwest, and Northeast this January further depressed GM and industry sales," the company wrote in a release.

GM also saw February sales fall 1% compared with a year ago -- at least a less disastrous drop than the one in January.

"Weather continued to impact the industry in February, but GM sales started to thaw during the Winter Olympic Games as our brand and marketing messages took hold," said Kurt McNeil, U.S. vice president of sales operations, in a release. "Car and crossover sales were particularly strong at Buick and Chevrolet, and we continue to have a strong mix of pickup sales.

Is weather really to blame?

2013 was a tremendously strong year for the auto industry, with Ford posting an 11% gain in sales, Chrysler growing sales by 9%, and GM posting a gain of 7%.

Analysts have said auto sales will see continued but slower growth in 2014, Fox Business reported. For January, Kelley Blue Book recently projected that sales would rise 1.6% compared to January 2013. Edmunds.com was looking for a modest decline of .6% across the industry.

Kelley Blue Book senior analyst Alec Gutierrez told Fox Business that his company saw a weather impact in its data, explaining that sales were slower in northern states compared to the West Coast.

"I fell like weather played some role," he said of the January results.

Cars are not restaurant meals

If snow stops you from going out to eat on a Saturday night you might not go spend the money you would have at the restaurant once the weather clears. Some impulse retail and restaurant sales are just lost when bad weather gets in the way.

In general that is not the case for car purchases as people buy cars because they need them, feel it's time to replace their vehicle, or have paid off a previous car loan. A car not purchased due to snow, ice, or other severe weather is likely a purchase delayed, not canceled.

It seems likely that since the same factors that fueled an excellent 2013 for the U.S. auto industry are still in place -- low interest rates, pent-up demand, and an improving economy -- that 2014 will ultimately recover. That should be obvious when March numbers are reported, unless the poor winter weather continues (which it has for at least some of the country) or by April's numbers at the latest.

If those months show gains and bring totals for the year closer to the predicted small gains, the auto industry can rejoice. If they don't, then it wasn't the weather at all. It was that customers weren't looking to buy in the first place.

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Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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