Auto sales jumped sharply in the United States last month as consumers came back to showrooms to check out the newest models. The world's top two automakers gained the most traction in February, bolstered in part by consumers migrating to more fuel-efficient vehicles. Toyota and General Motors posted the biggest year-over-year gains but other automakers are also reporting robust sales.
Auto dealerships enjoyed their best month since August 2009, when the government's cash for clunkers program gave the industry a much needed boost. Auto analyst George Magliano says U.S. sales surged 27 percent in February, easily beating already high expectations.
"We are getting this with less incentives, better pricing, higher transaction prices," he said. "The mix of vehicles is better. The people are buying the top end of the line as opposed to the entry model."
General Motors, which emerged from bankruptcy last year, led the pack with a 46 percent increase in business. And number one Toyota, which was hurt by massive recalls last year, was up 42 percent.
Ford Motor Company, the only U.S. automaker to refuse a bailout, gained 14 percent - while Chrysler posted a 13 percent increase ahead of its public offering expected later this year.
Ford sales analyst George Pipas attributed the higher numbers to improved consumer confidence and pent-up demand.
"Consumers have been sitting on the sidelines for two years and deferring purchases of automobiles," he said. "And so one of the built up things in our industry is that now the age of cars and trucks on the road is over 10 years and that's a historic high. So at some point in time and in fact already we are starting to see those vehicles being traded for new cars and trucks."
But the gains may be temporary. Investors fear rising oil prices due to the unrest in Libya could foil the economic recovery, leaving consumers with less money to buy cars. Magliano disagrees, saying higher gas prices might actually be a selling point.
"With gasoline prices higher, certain people might want to go out there and get a much more fuel-efficient vehicle and I don't mean even a hybrid or an electric vehicle which they could do, but the gasoline engine vehicles get 25, 30 percent better mileage today than they did three or four years ago," he said.
Auto executives say cheaper leases and easier credit helped boost the industry's bottom line. Based on last month's rate, total U.S. sales could top 13 million vehicles this year.