Chattanooga-made Volkswagen Passat has best March ever

Chattanooga-made Volkswagen Passat has best March ever

April 2nd, 2014 by Staff Reports and Wire Service in Business Around the Region

VW Passat

Photo by Associated Press /Times Free Press.

Volkswagen of America reported Tuesday that sales of its Chattanooga-made Passat were its best ever in March, and that the company's marketing efforts for its diesel-powered models is paying off.

Passat sales hit 11,050 in March with 41 percent of those clean-diesel versions. The share of TDI sales is an all-time monthly high for the sedan.

"We're exciting about our opportunities and the TDI," said Mark Barnes, VW of America's vice president of sales.

Still, total VW sales of 36,717 were off for March, down 2.6 percent from a year ago, the automaker reported. Its Golf, Beetle and Tiguan models were down for the month.

For the first quarter, VW sales are 11 percent behind the same period in 2013. Passat sales are off 6.3 percent for the year so far.

Jack Nerad, Kelley Blue Book's executive marketing analyst, said auto sales in general in the U.S. in March were "pretty strong."

"I see a stronger spring," he said, adding that economic activity is picking up and weather is improving.

Automakers said new car and truck sales picked up speed halfway through the month, culminating in a strong final weekend. Toyota dealers had their two best sales weekends of the year at the end of the month, the company said.

"We're optimistic that momentum will spring us into April," said Bill Fay, who manages the Toyota division in the U.S.

Industry sales rose 6 percent to 1.5 million vehicles, far outpacing analysts' expectations. The sales pace was the fastest since November, according to Autodata Corp.

Hamilton County car sales also improved last month, although local car and truck sales were still more than third below the sales pace prior to the Great Recession. In March, dealers titled 454 new cars and 590 new trucks -- up 2.5 percent from a year ago.

In the first quarter, new vehicle sales in Hamilton County were up 2.5 percent from the same period a year ago.

Nationwide, March sales helped rescue what was otherwise a disappointing first quarter. Analysts had predicted flat growth for the first three months of this year after harsh weather in January and February hurt sales. But March helped pull first quarter sales up 1.4 percent.

The month saw some big gainers. Chrysler's sales rose 13 percent on demand for Ram pickups and the new Jeep Cherokee SUV. Subaru's sales were up 21 percent; its new Forester SUV jumped 53 percent to nearly 14,000.

Toyota's sales rose 5 percent. Sales of the Prius hybrid fell 16 percent, as stable gas prices caused consumer interest in efficient vehicles to wane. But demand for its pickups and SUVs was strong.

General Motors' sales were up 4 percent despite a series of safety recalls of older model vehicles. Buick saw double-digit gains because of its new Encore SUV, and sales of the Chevrolet Silverado pickup rose 7 percent.

Number of new registered vehicles in Hamilton County.

Number of new registered vehicles in Hamilton County.

Illustration by Laura McNutt /Times Free Press.

Jessica Caldwell, a senior analyst with the car shopping site, said buyer consideration for GM brands on Edmunds' Web site has remained steady despite the recall crisis, which is currently the subject of several federal investigations.

"Shoppers still see it as a trusted brand," she said.

Nissan's sales were up 8 percent. Ford's rose 3 percent, with a 5-percent gain for the F-Series pickup compensating for lower car sales.

Volkswagen's sales fell 3 percent, while Hyundai and Honda both saw 2 percent declines. All three rely more heavily on sales of cars, which were outsold by trucks and SUVs in March.

While first quarter sales topped expectations, they didn't grow as quickly as last year, when the industry saw a 6 percent sales increase in the same three-month period.

Jesse Toprak, the chief analyst for the car-buying site, said the fundamentals that helped autos rebound from the recession remain the same. Low interest rates, declining unemployment and attractive new vehicles will continue to bring buyers into showrooms.

But they won't be buying at the same pace. Since 2010, U.S. sales have grown an average of 10 percent each year, but they're now reaching a natural peak, he said.

"We are certainly transitioning from a market that was in hyper-recovery mode to a mature market where double-digit gains will be increasingly difficult to attain," Toprak said.

Based on the first quarter, Toprak lowered his full-year U.S. sales forecast to 16.1 million vehicles from 16.5 million. The industry sold 15.6 million cars and trucks in 2013.

LMC Automotive, a data firm, also lowered its annual sales forecast, to 16.1 million vehicles from 16.2 million.

Others said improving weather and increases in incentives should boost sales as spring progresses. Weaker-than-expected sales in January and February caused cars to pile up on dealer lots, and automakers will likely offer more deals to get them sold.

"The momentum built in March should set the market up for a big month in April," said Alec Gutierrez, a senior analyst with Kelley Blue Book.