May 1, 2012 / 2:19 PM / 5 years ago

GM lifts U.S. sales outlook; Chrysler posts gains

Chrysler auto assembly workers work on the line assembling Jeep Grand Cherokees and Dodge Durangos at the Chrysler Jefferson North Assembly plant in Detroit, Michigan April 26, 2012. REUTERS/Rebecca Cook

DETROIT (Reuters) - General Motors Co (GM.N) and Ford Motor Co (F.N) both reported a smaller-than-expected decline in U.S. new vehicle sales in April, and GM, the largest U.S. automaker, raised its full-year forecast for the industry due to a strengthening economy.

GM cautioned that the next few months could be choppy, but projected that U.S. auto sales for the industry this year would be at their highest level since 2007.

GM said overall industry sales will be between 14 million and 14.5 million cars and trucks this year, up from its previous outlook of 13.5 million to 14 million.

2012 sales of 14 million would represent a 9.4 percent increase over last year’s U.S. auto sales. A 14.5 million figure would be a 13.3 percent increase.

“Despite some persistent headwinds that have come in and out of the market, whether it is the European debt crisis or some uncertainty around fuel prices, we continue to expect gradual improvement in the economy going forward,” GM sales executive Don Johnson told analysts and reporters on a conference call.

The U.S. auto industry is on the mend after its near-collapse in 2009 when GM and smaller rival Chrysler Group LLC filed for bankruptcy and overall U.S. auto sales fell to 10.4 million. By comparison, vehicle sales averaged around 16.7 million a year between 1998 and 2007.

In the first quarter of 2012, the annual sales pace was 14.6 million, buoyed by the increased need for American car shoppers to replace their aging vehicles and other factors, Johnson said.

Among the best performers for April was No. 3 U.S. automaker Chrysler, which posted an increase of 20 percent. Chrysler has been helped by an overhauled lineup of vehicles and aggressive advertising including a Super Bowl commercial featuring actor and director Clint Eastwood.

Over the next few months, GM predicted that U.S. sales growth would be flat compared with the first quarter, when the sales pace outstripped even the most bullish estimates.

“The next couple of months I think will be a repeat of the March-April trend. After that, I think we’ll have to see what kind of strength the economy gets under foot,” Johnson said.

GM reported an 8.2 percent drop in vehicle sales, while Ford’s sales in April fell 5 percent. Toyota Motor Corp (7203.T) reported an 11.6 percent sales gain, while Volkswagen AG (VOWG_p.DE) said sales rose 31.5 percent.

GM and Ford said their declines were due to three fewer selling days in April 2012 compared with the year-ago month, a quirk in the calendar that has happened just twice in the past 10 years.

When adjusted for the fewer selling days, Ford said its April sales rose 7 percent while GM rose 3 percent.

GM shares were up 1.7 percent at $23.38 and Ford shares were up a penny at $11.29 on Tuesday afternoon on the New York Stock Exchange.

FORD SAYS FIESTA SALES OFF 44 PCT

Including medium and heavy trucks, Ford expects the overall industry to post an annual sales rate for April in the “mid-14 million” range. Chrysler forecast an April sales rate for the industry of 14.6 million vehicles.

Economists polled by Thomson Reuters predicted a sales rate of 14.4 million rate for April. The March rate was 14.4 million.

For 2012, Ford maintained its previous forecast of U.S. auto sales of between 14.5 million and 15 million, which includes medium- and heavy-duty trucks. That would be an estimated 14.2 million to 14.5 million in the light vehicle sales that most of the industry uses as a benchmark.

GM’s 8.2 percent decline in April sales to 213,387 new vehicles included a 25 percent drop in fleet sales. Ford sold 180,350 new vehicles compared with 189,778 a year earlier.

Sales of the Ford Escape SUV, which is expected to be replaced later this year, fell by a fifth while Fiesta subcompact sales dropped 44 percent.

Last week, executives said Ford’s incentive strategy in April would contribute to a drop in its U.S. market share for the month. TrueCar.com said incentives on Ford cars and trucks fell about 10 percent from March 2012, compared with a drop of 4.7 percent for the industry.

Chrysler, controlled by Italian automaker Fiat SpA FIA.MI, said sales rose 20 percent to 141,165 vehicles, compared with 117,225 in the same month last year.

Auto sales are watched as one of the earliest snapshots of American consumer demand. In recent months, sales figures have proven a bright spot in an economy that expanded at a 2.2 percent annual rate in the first quarter.

But there are mounting signs that the broader U.S. economy is losing steam. Analysts debate whether high fuel prices and warm weather boosted sales in the first quarter, potentially leading to a pullback in sales later in the year.

Reporting By Deepa Seetharaman and Bernie Woodall; Editing by Gerald E. McCormick, John Wallace and Matthew Lewis

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