So much for concerns about auto sales: U.S. sales of cars and light trucks (pickups and SUVs) were up 11% in January over year-ago numbers, a strong result that suggests economic momentum is increasing.
That result was good enough to put the annualized sales pace at 14.1 million, the highest monthly mark posted since the "Cash for Clunkers"-fueled sales boomlet in August of 2009.
Buried in the numbers are several trends worth noting, starting with a big one: After two years of troubles, Toyota
A troubling note for GM
GM's sales were down 6% over (admittedly strong) year-ago figures, and that was despite an unusually hefty proportion of fleet sales, which made up 30% of the company's total for the month.
That's an eyebrow-raiser. Low-margin fleet sales were a bane of bad old Detroit, when the Big Three used them as a crutch to keep production high as consumer interest in their products waned. That history means that any jump in Detroit's fleet numbers (and this was a jump; an average around 25% has been more typical recently, and is regarded as healthy) is going to be viewed skeptically by analysts.
But this jump shouldn't be cause for too much concern yet: As Edmunds analyst Michelle Krebs points out, January is typically a high month for fleet sales. Ford's
But it's a telling sign that the General posted a sales decline despite the fleet-sales cushion. Sales of both Buick and Cadillac brand vehicles were off sharply, as both brands are waiting on fresh products. Chevy did better, with good results driven by strong sales of one of GM's best new cars, the Cruze compact, and one of its golden-oldies, the big Suburban SUV. The Camaro, another of GM's more recent offerings, also saw strong sales on the month.
Expect that to be a theme in coming months. GM's efforts to overhaul its product line came to a crashing halt during the company's downward spiral, and it lost substantial ground to competitors like Ford who were able to continue investing in new product programs during the downturn. GM is now moving aggressively to make up for lost time, but it takes time to develop new vehicles -- quite a lot of time. Approximately 30 months or so is typical for a new-car program, and much of GM's pre-bankruptcy work had to be torn up and restarted from scratch, as the competitive landscape had shifted in the interim.
GM's new cars and trucks are coming, and signs so far suggest that they'll be quite competitive. But they won't be rolling out in quantity until 2013 and 2014. In the interim, strong competitors will be able to gain sales ground against the general.
Strong competitors, for instance, like Toyota.
Godzilla's back, and boy is he mad
There was never any question that Toyota was going to be very aggressive in winning back lost market share once the company got its production issues straightened out, and January saw the beginnings of that effort. Toyota's sales were up 7.5% on the month, a result comparable to Ford's, but driven by somewhat different segments of the market.
While Ford saw success with its compact Focus and small SUVs, Toyota posted an eye-popping year-over-year gain of almost 56% for its perennial class-leading Camry, and a 79% gain for its big Avalon sedan. Prius sales were solid, too, up almost 9%, but sales of the compact Corolla were down significantly. The Corolla sales may be decreasing due in part to continuing inventory challenges during the first part of the month, and possibly due to the strength of the smaller Yaris, which posted a 64% gain over low year-ago numbers.
The upshot: Now it gets complicated
2012 is already shaping up as a rough battle for market share. Spending on "incentives" -- those cash-back and zero-percent financing deals funded by automakers to juice sales -- could rise sharply as the battle heats up. Toyota has already signaled that they will spend heavily to regain lost share, and the other automakers may be forced to spend to keep up.
A price war won't help anyone's margins, of course, and with the big global automakers already squeezed by difficult economic conditions overseas, a reduction in U.S. profits could hurt. Is that where things are going? Keep an eye on this space.
Strong U.S. sales will help Ford sustain and increase its dividend, which is due to reappear in March. But you don't have to wait until March to put the power of reinvested dividends to work in your portfolio. In a special new report, Motley Fool analysts have identified "11 rock-solid dividend stocks," all great additions to a long-term investor's portfolio. This new report is completely free for Fool readers, but only for a limited time, so get instant access now.
Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.