U.S. auto sales in February were on track to show a fourth straight month of strong sales as gains in the housing market tempered worries over the wave of federal spending cuts due to begin on Friday.
The annual auto sales pace for February is set to come in around 15.3 million vehicles, according to Morgan Stanley analyst Adam Jonas. This surpasses the 15.1 million rate expected by economists polled by Thomson Reuters.
The rate has held above the 15 million-vehicle mark since November, a sign that rising home values are helping American consumers feel more confident about buying a new vehicle. This boost comes at a time when the average vehicle on the road is a record 11 years old and pushing past the point of repair.
"The escalator is heading up and not down," said Kurt McNeil, head of U.S. sales operations for General Motors Co (GM.N), which posted a better-than-expected sales gain.
Increased housing construction helped boost sales of pickup trucks during the month. Truck sales to small business owners were up 40 percent, giving a "strong vote of confidence in the underlying economy," McNeil said.
GM, the largest U.S. automaker, posted a nearly 30 percent jump in sales of its Chevrolet Silverado trucks, while Ford Motor Co's (F.N) F-Series gained 15.3 percent.
Improvements in the housing market and pent-up demand for new vehicles offset the risks posed to the broader economy by the across-the-board "sequestration" U.S. budget cuts, Ford and GM executives said during conference calls on Friday.
U.S. consumers are showing "nerves of steel" in the face of the budget cuts, Ford Chief Economist Ellen Hughes-Cromwick said, adding that the cuts would lop off about a half a percentage point from GDP growth if fully realized.
Auto sales each month are an early indicator of economic health. The auto industry is in the midst of its fourth year of recovery from an economic downturn that pushed GM and its smaller U.S. rival, Chrysler Group LLC, into bankruptcy in 2009.
GM BEATS ESTIMATES, WHILE FORD LAGS
GM's U.S. sales rose 7 percent in February to 224,314 cars and trucks, while Ford, the No. 2 U.S. automaker, saw sales rise 9 percent to a weaker-than-expected 195,822 vehicles.
U.S. auto sales in 2012 rose more than 13 percent to 14.5 million cars and trucks. Sales rose 14 percent in January to an annual sales rate of 15.3 million.
Like January, February is typically a slow sales month for the industry, so a small change in sales can have a large impact on the annual rate for the month.
Sales at Chrysler, majority-owned by Italy's Fiat SpA (FIA.MI), rose 4 percent to 139,015 vehicles, slightly less than some analysts expected.
Japanese automakers Toyota Motor Corp (7203.T), Honda Motor Co (7267.T) and Nissan Motor Co (7201.T) each posted weaker-than-expected sales last month. Toyota's sales rose 4.3 percent, while Honda fell 2 percent and Nissan dropped 6.6 percent.
GM OUTLOOK BULLISH
GM predicted that the industry's U.S. sales rate would be 15.5 million vehicles for February, a forecast more optimistic than that of its rivals.
Ford said the February sales rate would be in the mid-15 million range, including medium and heavy trucks, which typically add 300,000 vehicles to the monthly sales rate.
Chrysler, the smallest U.S. automaker, estimated the month will finish at 15.5 million, including medium and heavy trucks.
Chrysler said some Jeep sport utility vehicles have been in short supply, with the discontinuation of the Liberty last summer and the recent launch of the 2014 Grand Cherokee.
CEO Sergio Marchionne previously said first-quarter volumes would be lower than the same period last year due to the new-vehicle launches.
"We expect to get our inventory gaps corrected over the next 90 days, resulting in additional products contributing to our growth," Chrysler U.S. sales chief Reid Bigland said.
A successor to the Liberty, the 2014 Jeep Cherokee, will be unveiled later this month at the New York Auto Show and will go on sale in May.
GM shares were up 0.5 percent at $27.28 on Friday afternoon, and Ford shares were down 0.1 percent at $12.59.