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06. April 2010

Rays of recovery - US auto sales jumped to a 7 month high in March

Reuters reported that US auto sales jumped to a 7 month high in March 2010 led by a 41% surge at Toyota Motor Corporation after the Japanese automaker offered the steepest discounts in its history to win back sales lost during its recent safety crisis.

Overall, US auto sales jumped 24% in March 2010, the best showing since August when the US government's cash for clunkers incentives caused sales to spike. Boosted by consumer response to zero percent financing offers and rebates on most of its line up in March, Toyota snapped two months of sales declines driven by recalls and a production and sales halt in its largest market.

General Motors sales rose nearly 21% from a year earlier. Toyota was second in total sales, while Ford Motor Co ranked third after a nearly 40% sales increase.

US sales topped the 1 million vehicle mark in March 2010, which was the strongest monthly result since September 2008 excluding last August. The strength in the United States was also reflected in sales in Europe and Asia, as temporary government scrapping schemes boosted demand. Despite the industry's rebound in March, sales remain sharply below recent highs. The US auto industry averaged a sales rate of more than 16 million units in the five years to 2008.

Nissan Motor Co's US sales rose by 43% in March from the prior year, putting it ahead of Chrysler in terms of market share for the second time in three months. Industry executives attributed the US sales rebound in part to incentives, pent up demand from February when snow storms hit many areas and signs of broader economic stability.

US auto sales rebound US auto giant Chrysler files for bankruptcy
The US sales increase contrasts with March 2009 when the industry was mired in a deep US sales downturn ahead of bankruptcies by GM and Chrysler. Only Chrysler among the largest automakers posted a US sales decline in March. Chrysler said sales fell 8% in March from a year earlier and it planned incentives.

Ms Jessica Caldwell analyst at Edmunds.com said that "Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand."

Mr Don Esmond SVP for sales at Toyota US said that incentives would be extended beyond April 5th 2010, but offered no specifics. He added that "We need a little bit of a kick start to kind of get the market in our direction and we'll continue. We're not going to walk away from our customers."

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