US auto sales back on track in April – USA TODAY

The U.S. auto industry bounced back from a surprisingly slower March to post strong sales in April, although rising discounts suggest automakers are getting increasingly aggressive in their battle for market share.

U.S. new-vehicle sales rose 4% in April to 1.51 million units, compared with the same period a year earlier, according to Autodata. That matched Edmunds.com and Kelley Blue Book expectations of 4% growth. It reflects an annualized selling rate of 17.42 million units.

After hitting a full-year sales record of 17.5 million vehicles in 2015 and enjoying a strong first two months of 2016, the annualized selling rate hit a 13-month low of 16.56 million units in March.

But April’s performance minimizes any potential concern about a downturn.

“It’s clear there’s plenty of life left in this automotive cycle,” AutoTrader.com analyst Michelle Krebs said.

General Motors’ sales fell 4% as the automaker raises its emphasis on more profitable retail sales and cuts its reliance on less-lucrative fleet sales. Ford’s sales rose 4%, and Fiat Chrysler’s rose 6%.

Japanese automakers Toyota, Nissan and Honda posted increases of 4%, 13% and 14%, respectively.

The scandal-stricken Volkswagen brand had another tough month, with sales down 10% as dealers are still not allowed to sell diesel cars fitted with illegal emissions software.

Although the industry’s sales increase appeared encouraging, any signs of rising discounts raise questions about the foundation lurking underneath the shiny sheet metal. Discounts rose 13% in April, compared with a year earlier, to $3,021 per vehicle, according to TrueCar. That far outpaced the 1.9% increase in average transaction prices to $33,865, according to Kelley Blue Book. Higher discounts may undermine profits.

Taken together, the pricing trends are worth “closely monitoring,” Krebs said, although the industry is still strongly profitable.

“This is certainly a positive performance after last month’s results,” Kelley Blue Book analyst Alec Gutierrez said. “It seems as though we’re right back on pace after a slightly disappointing March.”

To be sure, small and midsize cars are languishing amid low gasoline prices, save for a few isolated pockets of success. Honda car sales rose 14%, for example. And GM’s redesigned Chevrolet Malibu is turning heads, with sales up a whopping 25%.

But compact cars such as the Chevy Cruze, Ford Focus and Dodge Dart are slumping, down 32%, 12% and 49%, respectively. Put simply, Americans are losing interest in most small vehicles, preferring the roomier design and decent fuel economy of crossovers, SUVs and trucks.

Ford, for example, sold more SUVs in April than it had in any previous April — including the boom years of the late 1990s, when low gasoline enticed many consumers to buy big vehicles.

“We don’t have any expectation for this preference for trucks and utilities to shift at any point,” Gutierrez said.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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