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Cheap gas, Labor Day weekend drive automakers' U.S. sales in September

Published 10/01/2015, 12:47 PM
Updated 10/01/2015, 12:47 PM
© Reuters. General view of the front entrance at the General Motors Assembly Plant in Arlington, Texas

© Reuters. General view of the front entrance at the General Motors Assembly Plant in Arlington, Texas

By Sweta Singh

(Reuters) - The big three U.S. automakers - General Motors Co (N:GM), Ford Motor Co (N:F) and the U.S. operations of Fiat Chrysler (NYSE:FCAU) Automobiles NV (N:FCAU) - reported a jump in September sales on Thursday as cheap gasoline and ultra-low interest rates drove demand for sport utility vehicles and pickup trucks.

Sales also got a boost from the calendar, with the entire Labor Day weekend falling in September for the first time since 2012. The holiday weekend is traditionally important for sales.

Strong demand for new cars and light trucks in the United States has been giving automakers a boost at a time when sales in China and other markets are slowing.

Total U.S. auto sales, an early glimpse of consumer spending each month, were expected to have risen about 14 percent in September, industry consultancy Edmunds.com said last month.

GM, the largest U.S. automaker, said its total sales in September rose about 12 percent to 251,310 vehicles compared with the same month last year.

The company said it expected total industry sales for September to hit 18.3 million on a seasonally adjusted annual rate (SAAR) basis.

That would be the highest since July 2005, when the SAAR was 20.6 million. (http://bit.ly/1N4EaGm)

"The U.S. is adding jobs, disposable income is rising, energy prices and interest rates remain low and business continues to invest, but the fact remains this has been a slow recovery," said Mustafa Mohatarem, GM's chief economist.

"The economy still has room to grow and so do auto sales, particularly now that the millennials are entering the workforce and starting households," he added.

Ford's total sales rose 23 percent to 221,599. Ford-brand SUV sales increased 27 percent, the best in 12 years, while trucks sales increased 23.2 percent.

Ford said it expected a SAAR of about 18 million for September. Total industry sales will be released later on Thursday.

Fiat Chrysler's (MI:FCHA) sales increased 14 percent to 193,019, boosted by the continued strength of its Jeep SUV brand. Jeep sales jumped 40 percent.

"On the back of a strong sales industry we were able to achieve our best September sales in 15 years and our 66th-consecutive month of year-over-year sales growth," said Reid Bigland, head of the company's U.S. sales.

SMALL INCREASE FOR VOLKSWAGEN

Volkswagen AG (DE:VOWG_p) said its September U.S. sales increased by just 0.56 percent to 26,141 vehicles, showing the effect of the halt in sales of its 2-liter four-cylinder turbo-diesel engine cars from the market during the month.

The German carmaker faces up to $18 billion in penalties to go along with a severely dented reputation after it admitted to U.S. regulators that it programmed its cars to cheat on emission tests.

While low gas prices seem likely to continue to help sales of SUVs and pickups such as the Chevrolet Silverado and Ford F-150, the days of near-zero interest rates look set to end as the Federal Reserve considers raising rates for the first time since 2006. Strong auto sales could help hasten that decision.

For now, though, low rates remain a driver for auto sales.

© Reuters. General view of the front entrance at the General Motors Assembly Plant in Arlington, Texas

"The Federal Reserve's decision (in September) to keep interest rates at the current level paves the way for the U.S. auto market to post strong results for the remainder of 2015," said Jeff Schuster, vice president of forecasting at LMC Automotive.

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