Ahead of the Bell: April auto sales

April US auto sales expected to be strong; analysts see little risk of slowing this year

Associated Press

DETROIT (AP) -- By nearly all accounts, U.S. auto sales zipped along in April and are heading for their highest annual total in six years.

Automakers release April numbers on Wednesday. Sales likely stayed on a pace to top 15 million cars and trucks this year.

Barring an unexpected event that causes a real estate price collapse or rapidly rising job losses, there's nothing to stop sales from growing further in the next few years, industry analysts say.

"I don't see any significant hurdles on the horizon," said Alec Gutierrez, a senior market analyst at Kelley Blue Book. "I don't see us taking a step back, provided the unemployment rate at least holds steady."

U.S. unemployment stands at a stubbornly high 7.6 percent, but that hasn't slowed auto sales much. Analysts are predicting that April sales ran at an annual rate of 15.3 million. That would make it the best April since 2007 and the sixth-straight month of sales above a 15 million yearly pace.

Sales were so good for April that LMC Automotive, a Detroit-area auto industry forecasting firm, raised its full-year prediction by a tenth of a point to 15.4 million.

Aside from unemployment, almost every factor that affects car and truck sales is positive. Interest rates are low, with the average four-year loan on a new car running at 2.4 percent, according to Bankrate.com. Also, credit is widely available, even to those with low scores. Used-car values are still high, so people get good money when they trade in their cars. Lease deals are good. Gas prices have fallen.

In addition, home-building is on the rise, up 7 percent from February to March. That usually means better sales of big pickup trucks as companies and laborers return to the market. Kelley Blue Book expects big pickup sales to rise more than 26 percent in April over a year ago.

Many businesses and consumers need to replace older trucks and cars. The average age of a U.S. vehicle is 11.2 years. Plus, automakers have rolled out dozens of exciting new models in the past year, drawing buyers into showrooms.

"Relatively lower gas prices coupled with small business demand improving for trucks resulted in a strong showing for small and large pickups in April," said Jesse Toprak, senior analyst for the TrueCar.com auto pricing site.

One category that's soaring is small crossover SUVs. Sales are expected to rise 22.5 percent, according to Kelley Blue Book. Fuel-efficient models such as the Ford Escape, Honda CR-V and Mazda CX-5 are driving sales up, Gutierrez said.

Of the major automakers, Nissan Motor Co. is expected to post the largest sales gain. Several analysts expect an increase of more than 20 percent. Gutierrez said the midsize Altima is driving sales. Nissan normally boosts sales in March to finish out its fiscal year, then sees a drop in April, he said. Last year the company had a big April decline, Gutierrez said.

GM, Ford, Chrysler and Volkswagen all are expected to post double-digit gains for the month.

Kelley Blue Book expects auto prices to fall slightly in April compared with a year ago, to an average of $31,326.

Although the year is turning out to be strong for auto sales, Gutierrez said not to expect the double-digit growth rates of the past two years. He expects U.S. auto sales to end the year around 15.3 million cars and trucks, up 5.5 percent from last year's 14.5 million.

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