Trucks are typically sold at higher price points than cars; profits this season are also coming from an overall decline in incentives, which means that companies are turning a higher profit. Total industry incentives dropped 3 percent in April from the previous month; Ford and GM spent less on incentives, 7 and 4 percent respectively, while Chrysler incentive spending increased 3 percent.
“What people are actually paying for trucks is actually higher than last month. More people that need to buy trucks are buying trucks and they are not buying on discount,” says Jessica Caldwell, a senior analyst with Edmunds.com. “The fact that prices are not only holding, but getting a little higher on trucks is good news for the domestic car companies because it helps with their profits.
Overall, total light vehicle sale totals are expected at 1.28 million in April, a 9 percent increase from the same month last year, but down 11.5 percent from March. Analysts say they expect year-end sales to end up between 15 and 15.5 million units.
Ms. Caldwell explains that April is considered a “weird” month in the automotive industry because it is sandwiched between March, usually considered a robust sales month as it kicks off spring, and May, which benefits from the Memorial Day holiday and the start of summer – factors that generally drive people to car showrooms.
A convergence of factors is helping drive sales early this year: Improved consumer confidence, which rose to 68.1 from 61.0 in March, rising home prices, continued pent-up demand from last year, and low financing rates.
“These wealth effects have spurred consumer spending this year, including on car sales,” says Lacey Plache, chief economist for Edmunds.com. “Even as tough fiscal issues at home and abroad continue to crop up, consumers have not been derailed.
Leading foreign automaker Toyota reported sales fell 1.1 percent in April compared with the same month last year. Bill Fay, Toyota’s group vice president and general manager, released a statement saying that “continued retail sales growth indicates the underlying strength of the market, which is a great sign for the month ahead.