Auto Sales Maintain Pace Despite Wobbly Economy

Jose Ortega drives a new Jeep vehicle off a truck as he delivers the new vehicles to the Hollywood Chrysler Jeep sales lot on Oct. 3 in Hollywood, Fla. Chrysler Group LLC reported that its U.S. sales last month was a 27 percent increase compared with 2010 September sales. (Joe Raedle/Getty Images)

NEW YORK—U.S. auto sales gained momentum, increasing about 10 percent in September, alleviating some fears of a sluggish economic recovery affecting the auto industry.

The annual sales rate exceeded 13 million vehicles, the strongest sales rate since April.

General Motors Co. (NYSE: GM) reported total sales of 207,145 vehicles in September, up 20 percent from the same period last year. Ford Motor Co. (NYSE: F) sold 175,199 vehicles, up 9 percent. Chrysler group rose a robust 27 percent, selling 127,334 vehicles.

Ford economist Jenny Lin attributes the growth to a steady economy where “people who had been postponing buying new vehicles are now finally coming to replace vehicles.” Instead, the advantages of owning a new car “outweigh the bad news that appears to be slowing down the broader economic recovery,” Sales Chief of GM Don Johnson, states.

Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, noticed similar trends. “The industry overall is in much better shape in terms of inventories. Gas prices dropped, and when you combine that with higher incentive spending, it boosted the truck mix.” GM’s bestsellers include Chevrolet Tahoe, GMC Terrain and Yukon, Cadillac CTS, and Buick Regal. Usually correlating with the construction industry, full-sized pickup truck sales increased by 33 percent at GM and Chevrolet, 46 percent at Chrysler (Dodge), and 18 percent for Ford.

Similar to the declining car sales in France, Spain and Italy both reported a 15-year low for September sales levels. As Japan recovers from the aftershocks of the March earthquake, Honda Motor Co. and Toyota Motor Corp. fell behind in sales, with a decrease of around 8 percent and 18 percent, respectively.

Analysts estimate the average car on U.S. roads is about 11 years old, compared to 9 years old in 2007. Even if the cars can last that long, consumers will buy new cars because older cars broken beyond repair will no longer be worth repairing.

GM’s Johnson recently took into account the auto sales and analyzed the economic data to which he forecasted “slow growth scenario but not a double dip.”