Frigid cold temperatures in January and February froze U.S. auto sales compared to the year before. Early reports from Ford, GM, and Chrysler showed numbers very similar to February in 2013. Automakers estimated sales of about 1.2 million vehicles, which represents a gain of just 1%. Not surprisingly, industry sales were led by small SUVs and all-wheel drive vehicles that match well with the harsh weather.
“Weather continued to impact the industry in February, but GM sales started to thaw during the Winter Olympic Games as our brand and marketing messages took hold,” said GM’s U.S. sales chief Kurt McNeil.
The fact that lots of incentives were used to achieve minimal gains amidst the snowy weather raises questions about the future of the industry. Heavy incentives could cut into profit margins both in the short- and long-term. Though experts believe that more consumers will visit showrooms and look to make a purchase, sales-incentives given out in February could actually cut into March profits.
“The fear is going back to the old ways of having to sell the deal and not the car after years of staying clean,” notes Jesse Toprak, chief analyst for the research firm Cars.com. “(Dealers) don’t want the companies to fall off the wagon when it comes to incentives.” Though incentives are still reasonable, that could change if the coming months do not show improvements.
March, unlike the first two months of the year, has historically been a great month for U.S. auto sales and this year, it has five weekends, which should be good for the industry. It could prove to be a major indicator of how well the U.S. auto industry will perform this year.
McNeil does note that, even with slow sales early on, he expects 2014 to be a good year. “Despite a slower start to 2014 than most people expected, we look forward to a very successful year, backed by plenty of new products and what should be the strongest GDP growth since the end of the recession,” he said.
John Felice, Ford’s U.S. sales chief, echoed similar sentiments. “Despite all the challenges, it was a robust market,” he said. “We feel that as we head into March we’ll be in very good shape.”
“The weather patterns up here in Alaska didn’t affect us that much,” says Jared Scott, Sales Manager at Vito’s Auto Sales and Rentals. “We were actually warmer than average, so it didn’t have as big of an effect on us in the used car business. I would absolutely say that the cold was a factor for the rest of the country.”
Only time will tell whether or not U.S. automakers will thrive this year since consumers can be quite fickle and unpredictable. But, despite cold sales numbers in February, industry leaders are optimistic.