What gas spike? Americans still hungry for SUVs, pickups

Ford Explorers were one of the hot sellers in February, as demand for SUVs and trucks was very strong despite rising gas prices.Ford Explorers were one of the hot sellers in February, as demand for SUVs and trucks was very strong despite rising gas prices. By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- Rising gas prices did not keep Americans from buying large pickups and SUVs in February, according to sales results from leading automakers.

Industrywide U.S. auto sales shot up 27% compared to a year ago according to sales tracker Autodata. That's well above forecasts of about a 19% increase. The sales rate was the best since the Cash for Clunkers program, and at that pace, sales could reach 13.4 million vehicles over a full year.

The month was particularly strong for the sale of light trucks, such as pickups, vans and SUVs, even in the face of higher gas prices. Truck sales rose 32% and had the best sales rate since before the financial meltdown.

"We're seeing consumer demand coming back stronger than we anticipated, along with loans and leases becoming easier to get," said Jesse Toprak, analyst with TrueCar.com.

Toprak said the two types of vehicles getting the most attention from buyers are small cars and full-size trucks, demonstrating that while fuel economy is becoming more important, there's still a lot of pent-up demand for larger vehicles.

The increase in gas prices isn't making the impact on buyers it did even a few years ago, said Paul Ballew, chief economist for Nationwide Financial.

"Keep in mind, we reset our expectations. Five years ago, $3 a gallon was 'Oh my goodness.' Now it's more of a norm," he said.

The real benchmark is more like $4 a gallon, according to Sergio Stiberman, CEO of LeaseTrader.com. He pointed to a survey of those turning in leased trucks, which showed only 16% did so because of high gas prices in February, compared to 78% in summer 2008, when gas hit a record $4 a gallon.

"During the uptick, concerns and complaints heat up when we pass certain price benchmarks, but widespread behavior doesn't actually change until we reach $4.00 per gallon," he said.

AAA's estimate for the average price of a gallon of regular gas stands at $3.375, up 9% in the last month. The price hikes are accelerating as unrest in the Middle East raises crude oil prices, causing a 6% rise in just the last week.

General Motors (GM) reported sales jumped 46% from a year earlier, with strong demand for the Silverado pickup truck leading the way. GM's top-selling pickup posted a 60% gain in sales, and an 84% increase in retail sales to consumers.

"There's a lot of speculation about what fuel prices will do for pickups, but these people are buying for needs," said Don Johnson, GM's vice president, U.S. Sales Operations. "I don't see that slowing."

GM executives said they're also seeing strong demand for small cars. Sales of the Chevrolet Cruze were up 32% compared to year-ago sales of the Cobalt model it replaced. And 46% of overall Chevrolet sales were 4-cylinder models, up 6 percentage points from a year ago.

But Johnson said he doesn't think gas prices at this level will eat into industrywide sales, and that even a steady rise in gas prices should leave sales relatively unscathed. He's more worried about a sharp price spike that will put some buyers on the sidelines.

"Nobody knows what will happen with fuel prices for sure, other than the fact that there will be volatility," he said.

Sales gains were more modest at Ford Motor (F, Fortune 500) and Chrysler Group, but both reported strong sales in some large pickup and SUV models. Ford sales rose 14%, helped by a 139% jump in sales of its redesigned best-selling SUV, the Explorer. The strong demand has resulted in a shortage of Explorers in showrooms.

George Pipas, Ford's director of sales analysis, said that while there was an increase in small-car sales in the first two months of the year, new offerings in the segment likely had as much to do with the shift as gas prices did.

Ken Czubay, Ford's vice president in charge of U.S. sales, said even truck buyers are becoming more conscious about mileage, with 30% of Ford's truck sales now fuel-efficient six-cylinder vehicles rather than the traditional eight-cylinder engine.

Chrysler Group reported a 13% gain in sales, almost entirely due to the 81% jump in sales among its Ram truck brand. The redesigned Jeep Grand Cherokee SUV also posted a 31% increase in sales.

Toyota Motor (TM) reported a 42% jump in sales, despite a new problem with recalls. Improved sales in small cars were a key element, with the Prius hybrid posting a 70% sales increase. The company was also helped by a 57% rise in SUV sales and improved sales of its Tundra full-sized pickup. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 6:14pm ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.