Ford noted a pick up in truck sales - Photo credit: Wikipedia
It’s not just housing and equity markets that seem to have climbed out of the abyss caused by the financial crisis. In March, Detroit’s Big Three had their best sales since 2007, while Toyota, the third largest automaker in the U.S., had its best performance since the Cash for Clunkers program in 2009.
Buoyed by cheap credit and an improving U.S. economy, auto sales are gaining momentum. General Motors saw a 6.4% increase in sales to 245,950 vehicles, coming in just shy of the 251,500 estimate. GM had its best March numbers in five years, noting that truck sales have improved along with a strengthening housing market. The company reiterated its 15 to 15.5 million forecast for industry-wide annual sales rate (SAAR) this year, adding its March estimate came in at 15.2 million.
Ford was the month’s second best performer, with sales topping estimates at 236,160, up 5.7% in March. The company recorded its best monthly results since May 2007, at the peak of the housing bubble, and noted continued demand for fuel efficient vehicle and acceleration in truck sales, which grew 6%.
The third big Detroit automaker, Chrysler, also announced it had its best monthly performance since before the housing meltdown that brought down the global economy. In March, the automaker currently owned by Italy’s Fiat Group saw sales rise 5% to 171,606 units, its strongest month since December 2007 and its 36-consecutive month of year-over-year sales gains.
Toyota Motor also had a good month, despite limited growth in sales. The Japanese automaker sold 205,342 units in March, a 1% increase and its highest monthly figure since the Cash for Clunkers program back in August 2009. Toyota had to face the devastating effects of the earthquake and tsunami that battered Japan two years ago, disrupting its global supply chain and causing a partial meltdown at the Fukushima Daiichi nuclear power plant. The company seems to have overcome its difficulties and production has greatly recovered.
The recovery in auto sales is one more sign the U.S. economy is picking up. Boosted by an incredibly easy Federal Reserve, stock markets managed to hit record highs over the past few weeks. With the Bernanke Fed buying $85 billion in Treasuries and mortgage-backed securities a month, the housing market has also bottomed out, with prices rising over the past several months across the nation. Auto sales, which are also tied to the price of money, have improved in tandem. With the Fed supporting improving markets, investors will now have to ask themselves what will happen once the Fed begins to tighten its monetary policy and rates rise. For the time being, though, it's all systems go.
