President Obama was in a celebratory mood at the D.C. auto show, checking out the latest vehicles from American car companies.
“It’s good to remember that there were folks that were willing to let this industry die. Because of folks coming together we’re back at a place where we can compete with any car company in the world.”
And the numbers for January – traditionally a tepid month for auto sales – were generally good.
Chrysler reported a 44% jump in auto sales – and its first full-year profit since 1997. Ford sales were up 7%. General Motors (NYSE: GM), however, lost ground after pulling back from using incentives to boost sales.
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One key factor has been pent-up demand. The average age of a U.S. vehicle is 11 years. So many Americans who put off buying a car in the recession are likely to start visiting dealerships soon.
U.S. carmakers have come a long way from the financial peril of nearly three years ago, but the road may be getting bumpier.Edmunds.com Vice Chairman, Jeremy Anwyl, notes:
“We do see car sales increasing. But we also see the costs associated with selling those cars continuing to climb, as the marketplace is going to be very competitive and that could actually put a downward drag on automaker profits.”
One of those competitors is Volkswagon, which – along with other foreign automakers – sees the recovering U.S. economy as a prime target for boosting their sales. VW’s US sales were up 48% in January compared to a year earlier. Volkswagen Group of America President and CEO, Jonathan Browning says:
“Really it’s a product of a number of things that we’ve been doing to build our overall growth strategy for the U.S. Whether that’s investment in plants, investment in products, or a lot of work in the marketplace to make the brand more accessible to more people in the U.S.”
The next battleground for these carmakers? This weekend’s Super Bowl ads, where automakers will spend big to get their messages to millions of viewers.