Slim Gain in Car Sales Leads to Optimism, and Skepticism, in Europe

FRANKFURT — Europe suffered another month of dismal car sales in September. But the numbers were a little less grim than a year ago, nurturing hopes that the market had finally hit bottom. And a sales rebound in Spain showed the effects of a United States-style “cash for clunkers” government stimulus program.

Auto sales in the European Union, as measured by new registrations, rose 5.4 percent in September compared with September 2012, the largest increase in more than two years, the European Automobile Manufacturers’ Association said on Wednesday. Ford and General Motors, which have lost billions in Europe in recent years, were among the manufacturers that sold more cars in September than a year earlier.

But the overall gain was less impressive than it sounded, reflecting the fact that it compared with September 2012, the worst month for European car sales in recent history. There were also some special factors that helped sales this September, including an extra working day and the Spanish government’s incentive program, which offers buyers up to 2,000 euros, or $2,700, when they trade in an older model for a more fuel-efficient new car.

Car sales in Spain surged 28.5 percent compared with September 2012, according to Anfac, the Spanish association of carmakers.

But Javier Díaz Zúñiga, head of sales at a car dealership on Madrid’s Príncipe de Vergara thoroughfare, was not impressed by the data showing a jump in Spanish car sales.

“People attach way too much significance to such a figure — and politicians then go on to publicize the conclusion that Spain is doing much better,” he said. The government’s incentive plan — the third since the start of the crisis — was “timely, but wait until you see sales drop back down again once it expires,” Mr. Díaz Zúñiga added.

In fact, Spain’s car market recovery has been more evident at the production level, with Ford and other carmakers recently expanding their presence there because of lower labor costs, while closing or downsizing factories in European nations like Britain and Belgium. On Wednesday, Anfac forecast that Spain’s car production would climb next year to 2.4 million cars, from 2.2 million in 2013.

Still, the broader European figures are likely to bolster those in the industry who argue that the car market has hit bottom and could begin to rebound gradually. And an increase in car sales bodes well for the larger European economy, suggesting that consumers are becoming more confident and willing to spend.

“On sheer volumes, Europe is not in brilliant shape,” Carlos Da Silva, an analyst at IHS Automotive, said. “Yet the underlying trend of the market is calling for a certain dose of optimism.”

Mr. Da Silva said, however, that any rebound would not be vibrant enough to solve problems of companies like PSA Peugeot Citroën of France, which has too much manufacturing capacity for the market and faces enormous political resistance to job cuts and factory closings.

“They will be in dire straits for a long time,” he said

About three million Europeans work in car factories or companies that make auto components, according to the manufacturers’ association, and the fate of the industry is closely intertwined with the broader economy. The September increase will reinforce expectations that the euro zone economy, which emerged from recession in the second quarter of this year, is recovering gradually.

Any rebound in car sales is likely to be weak, though, and there may be questions about how lasting it will be.

Many European countries used incentive programs similar to Spain’s to prop up sales in 2009, when Europe suffered a sharp recession. But when the programs ended, car sales plunged to depths not seen in 20 years.

Despite the caveats, Rabih Freiha, an auto analyst at Exane BNP in Paris, said there were some grounds for optimism. He said the report showed that the broad European market, which included the 27 European Union nations and Norway, Switzerland, Iceland and Liechtenstein, grew in September at an annualized rate of 13 million vehicles, the best showing since March.

“That’s still a healthy improvement, and it’s better than we’d expected at the beginning of the year,” Mr. Freiha said.

Jack Ewing reported from Frankfurt and Raphael Minder from Madrid. David Jolly contributed reporting from Paris.

2 Automakers Fear Effects of Shutdown on Sales

General Motors, the nation’s largest automaker, acknowledged that the shutdown was chipping away at the consumer confidence that automakers depend on to sell vehicles, even if it was still too early to gauge the full impact of the fiscal standoff.

“The longer this issue goes unresolved, the growing anxiety among consumers and the market will not help the industry keep up its strong pace,” said Greg Martin, a spokesman for General Motors.

Hyundai also said this week that industry sales could fall as much as 10 percent in October because of uncertainty surrounding the shutdown, according to John Krafcik, chief executive and president of Hyundai Motor America.

“Anytime you turn on the news, it’s all you’re hearing about,” Mr. Krafcik told Bloomberg TV on Monday. “We think that anxiety is the sort of anxiety that keeps customers, potential buyers, on the sidelines when they’re thinking about a big purchase like an automobile.”

The automakers are coming off a sluggish September, when new vehicle sales were off 4.2 percent. That was the first time that industrywide sales had dropped since January 2011. G.M., down 11 percent, and Hyundai, off 8.2 percent, were among the worst performers.

Now, rising economic uncertainty is adding to the concern that the sales momentum created this year by pent-up demand and readily available credit could continue to slow, analysts said.

“As the shutdown drags into its third week and the government moves closer to breaching the debt ceiling, the likelihood that October auto sales will be softer than expected increases,” said Lacey Plache, chief economist for the industry researcher Edmunds.com.

Not all automakers expressed concern, though. Ford Motor said that the industry appeared to be on pace with projections, made before the impasse, to sell more than 15.5 million vehicles this year.

“We haven’t seen any noticeable decline that can be directly attributed to the government shutdown at this time,” said Erich Merkle, Ford’s United States sales analyst.

Chrysler Group also said that the impact of the shutdown had been minimal.

“Outside of the greater Washington, D.C., area we see virtually no impact on auto sales in October,” Gualberto Ranieri, a Chrysler spokesman, said in an e-mail. “Right now we are confident that industry and Chrysler Group October sales will both be up over the same period in 2012.”

Some automakers, however, have started to acknowledge the shutdown’s impact on government workers’ finances. Hyundai, Ford, Nissan and Toyota have said that they will allow government employees to defer their car loan or lease payments for up to three months.

Toyota said its offer to assist customers affected by the shutdown included furloughed workers, businesses and employees of businesses directly affected by the shutdown, government contractors and suppliers. Customers “in good standing” are eligible to defer up to three months of payments through Toyota Financial Services or Lexus Financial Services.

“The government shutdown has placed an unanticipated financial strain on many individuals and families,” Al Smith, vice president of service operations for the Toyota Financial Services Group, said in a statement on Monday.

Toyota declined to say whether the government shutdown would affect October sales.

“Operationally we are fine,” Carly Schaffner, a spokeswoman, said.

Hyundai announced a program on Oct. 1 that gives current owners payment relief “for as long as they are out of work.” The automaker is offering to postpone payments by 90 days for furloughed employees who want to buy a car this month.

About a thousand people have applied to defer payments under Hyundai’s program, a spokesman, Chris Hosford, said.

G.M. and Chrysler said they had no plans to offer a similar program.

“However, as it is with most cases, the individual lender will work with the consumer,” said Mr. Martin, the G.M. spokesman.

This article has been revised to reflect the following correction:

Correction: October 17, 2013

An article on Wednesday about automakers’ concerns over the partial federal shutdown’s effect on car sales paraphrased incorrectly from remarks by John Krafcik, Hyundai’s chief executive, in a Bloomberg TV interview. He said that industry sales over all could fall as much as 10 percent in October; he was not referring to Hyundai’s sales alone. The article also misstated, in some copies, Ford Motors’ sales projections. It said the industry appeared on pace to sell more than 15.5 million vehicles this year, not this month.

$62 Million in Sales at ‘Art of the Automobile’ Auction

The Ferrari was the highlight of the much-publicized “Art of the Automobile” sale, held jointly by RM Auctions and Sotheby’s and billed as the first major collector-car auction in New York City in a decade. The total for the 31 vehicles that sold was just over $62 million.

The auction houses organized the sale as an experiment, aimed at a wider market for collector automobiles presented with an emphasis on art and design. While 11 record prices for particular models were set, the results of the experiment in presenting vehicles as art objects — in an auction season when paintings and sculptures have smashed previous price marks — were not entirely clear.

One keynote of the cars-as-art approach failed to sell. Bids for the one-of-a-kind orange 1955 Lincoln Indianapolis Exclusive Study, by the Italian coach builder Boano, topped out at $1.55 million against a presale estimate of $1.8 million to $2.5 million. Two other attention-getting lots went unsold: a 1997 Ferrari Formula One racecar and “The Duchess,” a 1941 Cadillac limousine with links both to royalty and to New York City.

Other results, including the buyer’s premium:

¦ 1956 Aston Martin DB 2/4 MKII, by Ghia, $2.3 million (estimate: $1.8 million to $2.4 million)

¦ 1955 Maserati A6G/2000 Spyder, by Zagato, $4.6 million ($3.5 million to $4.5 million)

¦ 1933 Duesenberg Model SJ, by Beverly, $1.8 million ($2 million to $2.5 million)

¦ 1938 Talbot-Lago T150-C SS Teardrop Cabriolet by Figoni & Falaschi, $7.2 million ($8 million to $10 million)

Sotheby’s reported heavy traffic at the public display of the vehicles earlier in the week, and about 500 people attended a symposium of collectors on Tuesday evening.

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Chrysler Auto Sales Up 12 Percent in August

In another report, the Federal Reserve said strong demand for autos helped keep the economy on a "modest to moderate" growth path in recent weeks, an assessment that leaves the door open for a reduction in the central bank's bond purchases.

Auto sales rose 17 percent last month to a seasonally adjusted annual rate of 16.1 million units. That was the fastest pace since October 2007 and beat the 15.8 million-unit rate analysts surveyed by Reuters had expected.

It was also the latest sign that economic activity is picking up after hitting a speed bump in July and supported stocks and bond yields, although the dollar fell from a six-week high against a basket of currencies as investors looked forward to a key jobs report on Friday.

Auto sales are a key leading indicator of consumer spending, which accounts for about 70 percent of U.S. economic activity.

"We continue to head in the right direction," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "With vehicle sales above 16 million (and) a slow but steadily improving job market, the Fed is going to feel comfortable tapering in September."

The central bank has been buying $85 billion in bonds each month to keep borrowing costs low. It is widely expected to reduce that amount when officials meet later this month and a strong gain in hiring for August would cement those bets.

A raft of weak data for July, including figures on consumer spending, industrial output, durable goods orders and homebuilding, had prompted economists to downgrade their third quarter growth estimates to as low as a 1.5 percent annual pace.

But the strong vehicle sales suggested those forecasts could undershoot.

"It may be a sign that the consumer will add more to growth this quarter than we initially thought," said Sweet. The economy grew 2.5 percent in the second quarter.

The auto sector's good fortunes were captured in the Fed's Beige Book report, which found strong demand for motor vehicles lifted spending in most parts of the country in early July through late August.

The report, prepared for the Fed's September 17-18 meeting and based on information collected from its business contacts nationwide, said several of the central bank's 12 districts reported strong demand for auto-related products.

AUTOS DRIVE GROWTH

"Chicago highlighted the auto industry as a main source of strength for that district's overall manufacturing sector, and contacts there expect demand for heavy and medium trucks to ratchet up further and to support growth in overall manufacturing for the remainder of the year," the Fed said.

In Cleveland, there were reports motor vehicle parts suppliers and assembly plants would need to expand capacity in order to meet demand, it said.

The strong sales reported by car makers and the Beige Book's findings backed up a survey from the Institute for Supply Management on Tuesday showing an acceleration in manufacturing activity in August, driven by sturdy gains in new orders.

"The relatively positive tone on the manufacturing sector appears quite consistent with the underlying theme of the recent ISM manufacturing sector reports, and is likely to be seen as an early signal of a more meaningful upturn in activity in the coming months," said Millan Mulraine, senior economist at TD Securities in New York.

"It will add to the other economic reports showing steady progress in the recovery, and pointing to some modest upside momentum for growth in the coming months."

Strong demand for autos also fueled import growth in July, helping to drive up the nation's trade deficit. The Commerce Department said the trade deficit widened 13.3 percent to $39.1 billion.

Auto imports reached an all-time high, and overall imports rose 1.6 percent.

Exports slipped 0.6 percent even as exports of petroleum products hit a record high and the country sold more food and industrial supplies.

A widening trade gap usually subtracts from GDP, the deficit held near its second quarter average, suggesting trade would likely have little effect on third-quarter economic growth.

(Reporting by Lucia Mutikani, additional reporting by Bernie Woodall and Ben Klayman in Detroit; Editing by Andrea Ricci and Krista Hughes)

Auto Sales Are Soaring, Propelled by Leases

In August, automakers reported another month of double-digit increases, selling 1.5 million vehicles, a 17 percent gain over the same month last year. That puts the seasonally adjusted annual industry sales rate at a postrecession high of 16.09 million, up from 14.49 million a year ago.

It is a promising sign for the industry, which has steadily increased production throughout the year to meet rising demand.

“Attractive low lease payments have proven very effective at getting new-car buyers back into the market,” said Jessica Caldwell, a senior analyst at the industry researcher Edmunds.com.

In 2013, leasing has accounted for 26 percent of new-vehicle purchases, according to Edmunds.com. In the years before the recession, leasing accounted for 16 percent to 20 percent, with activity focused on high-end cars and trucks.

General Motors, the nation’s largest automaker, has reaped the rewards. On Wednesday it said that its August sales rose 14.7 percent, its strongest month since September 2008. Ford Motor Company, which has taken a more conservative approach on leasing, posted a rise of 12 percent, and the Chrysler Group, 11.5 percent. For all three companies, the increases were led by a mix of small and midsize cars and trucks.

Auto dealers also point to the revival in leasing, which slowed in the recession as G.M. and Chrysler worked through bankruptcy, as a factor. “Leasing has made an amazing recovery,” said Kirt Frye, president of Sunnyside Automotive Group in Middleburg Heights, Ohio. Higher residual values, thanks to a robust used car market, and record low interest rates mean lower monthly payments for buyers with good credit.

The average monthly lease payment was $408, down from $416 last year, according to Experian Automotive, which analyzes automotive data.

At Sunnyside, leases make up one out of three vehicles sold at the dealership’s Chevrolet, Toyota, Honda and Mitsubishi marquees, Mr. Frye said. That rate is up from one out of five vehicles sold 18 months ago.

The dealership’s luxury Audi brand continues to sell about 60 percent of its vehicles through leases, which is in line with the high-end automaker’s usual business. But the real growth in leasing has come from the $199 monthly payments offered regionally this summer on the Chevrolet Malibu, Honda Accord and Toyota Camry midsize sedans, Mr. Frye said.

“I think that with the $199 price point, people say, ‘Yeah, I see the value there,’ ” Mr. Frye said.

The strategy appears to be working. In the highly competitive market for midsize sedans, Toyota sold 44,713 Camrys last month, a year-over-year increase of 21.8 percent. Honda Accord sales rose 10.8 percent, to 38,559 vehicles. The Chevrolet Malibu trailed larger competitors, selling 16,890 vehicles, but increased monthly sales 16.5 percent.

All four of G.M.’s brands showed double-digit sales increases in August. Cadillac posted the largest growth, with sales rising 38 percent; it was the best monthly showing for the brand since 1989. Buick’s sales jumped 37 percent, the strongest results in a decade. Sales of the automaker’s GMC brand jumped 14 percent, and its Chevrolet brand rose 10 percent.

“Our transformed lineup of cars, trucks and crossovers is performing very, very well,” said Kurt McNeil, G.M.’s vice president of United States sales operations.

Ford reported its best month for retail sales since August 2006. The midsize Fusion had good gains after Ford increased production at its Flat Rock assembly plant. Sales of its small cars, like the Fiesta subcompact and C-Max, rose 30 percent, while sales of the F-Series increased 22 percent.

U.S. Carmakers Post Strongest July Sales Since 2006

General Motors, the nation’s largest automaker, posted the largest overall increase, of 16 percent, with double-digit sales growth for all four of its brands — Chevrolet, Cadillac, G.M.C. and Buick. The Ford Motor Company and the Chrysler Group each said sales rose 11 percent last month on the strength of pickups and smaller, more fuel-efficient cars.

Over all, it was the strongest July since 2006 for the industry, with sales rising 14 percent, to 1.3 million vehicles. At that rate, 2013 sales for the industry would be 15.7 million vehicles, up from 14.1 million last year.

“For G.M., July was the most well-balanced month of the year from a retail sales standpoint; trucks were hot, but so were small cars and family vehicles,” said Kurt McNeil, vice president for G.M.’s United States sales operations. “Our experience shows that the difference between good sales and great sales in a slow-growth economy is how many new products you have to offer, and we are starting to hit our sweet spot.”

G.M. reported healthy sales of both 2013 models and 2014 models, especially of the newly redesigned Chevrolet Silverado pickup and the Impala midsize sedan.

With new styling and the chance to get a lower price on an older model, “you’re really attracting a broad range of customers into the showroom,” said Donald Johnson, G.M.’s vice president for Chevrolet sales and service.

Sales of the Impala rose 38 percent, helped by its No. 1 ranking last week in Consumer Reports. It was the first time in 20 years that the magazine had given an American sedan the top spot.

“This is the segment I love to watch,” said Michelle Krebs of Edmunds.com. “It is such a vicious battlefield, and an important one, as it is the biggest single segment in the business.”

Toyota said its sales rose 17 percent, while Honda reported an increase of 21 percent and Nissan 11 percent. Volkswagen was the only brand to report a drop in sales, of 3.3 percent.

As in recent months, pickups were especially popular in July as a recovery in housing and energy, coupled with pent-up demand, drew shoppers into dealerships, the automakers said.

Sales for G.M.’s trucks rose 44 percent. Ford said its F-Series sales rose 23 percent, and Chrysler’s Ram brand reported a 31 percent sales increase.

Shoppers also sought out small cars as they downsized and put more emphasis on fuel efficiency, said Erich Merkle, Ford’s United States sales analyst.

Sales of Ford’s small cars, including the Focus, the Fiesta and the C-Max, rose 32 percent for the best month since 2000. G.M. said that sales of the Cruze compact rose 70 percent, and Chrysler said that the Dodge Dart, with 6,064 sold, was a bright spot for the company.

“Baby boomers are becoming empty nesters and their need for size isn’t quite what it used to be,” Mr. Merkle said.

He added that younger customers who were looking to buy their first new car were opting for smaller models.

Ford would have sold more of its midsize Fusion sedan and Escape utility vehicle if not for an inventory shortage. The automaker is increasing capacity at its plants in the fall.

Though sales for the midsize segment were expected to be up over all for the year, the industry had some mixed results, said Alec Gutierrez, senior analyst at Kelley Blue Book.

“The Honda Accord, Nissan Altima and Toyota Camry each enjoyed solid growth this month, while the Chevrolet Malibu, Ford Fusion and Chrysler 200 saw year-over-year declines,” Mr. Gutierrez said. “The Fusion has been limited by low inventory, while the Malibu and 200 are each awaiting updates that should help to drive additional demand.”

The Chrysler Group said that sales of its Fiat and Jeep brands held steady at 2 percent as it prepared to unveil the new Jeep Cherokee later this year. Dodge sales rose 18 percent, led by the Durango utility vehicle and the Dart, while sales for the Chrysler brand fell 4 percent last month.

Collecting: A Furor Over Sales by the Petersen Museum

A July 16 Los Angeles Times article exposing the Petersen’s “quiet” liquidation of 119 cars from its collection of around 400 vehicles has produced a furor in the local classic car scene and claims that the Petersen’s board of wealthy collectors are steering the museum toward exhibiting highbrow classics and motorcycles and away from its mission of being home to Southern California’s automotive history.

“There’s no denying the visual beauty of prewar French motor cars,” a Times opinion writer, Paul Whitefield, wrote in a blog post. “But to many SoCal car buffs, a Voisin might as well be a violin.”

The article provoked a strong rebuke from the museum’s directors, who say that “deaccessioning” pieces in a collection is normal and, in the case of the Petersen, a necessary part of a master plan expected to be unveiled on Aug. 18 to upgrade the facility and keep it a star attraction in a city crowded with tourist draws.

“We’re being accused of devastating our collection,” said Terry Karges, the museum’s executive director. “We’re collectors, not liquidators. We’re not going to stop telling the story of the car culture in Southern California.”

Situated on Wilshire Boulevard west of downtown in a museum-heavy stretch known as the Miracle Mile, the Petersen museum opened in 1994 under the patronage of the publishing magnate Robert E. Petersen, a founder of Hot Rod and Motor Trend magazines, who died in 2007. The midcentury-modern building, a former department store erected in 1962, includes two floors of exhibits totaling about 150 cars, plus an underground vault of some 300 stored cars that only recently opened to public tours.

Mr. Karges says the museum’s exhibits as well as its building need renovation, while the vault, which is as long as a city block, has become overstuffed with cars unworthy of display. “They were given as donations,” he said, “but were never intended to be museum pieces.”

Among them are relatively common vintage models like a 1967 Camaro, unrestored oddballs like a 1976 A.M.C. Pacer and a wrecked 1968 Dodge Charger “General Lee” used in the 2005 film “The Dukes of Hazzard,” based on the 1980s TV show. Critics have cited such popular exotics as a Ferrari F40 and F50, as well as a famous pavement-hugging 1939 Lincoln Zephyr custom car called Scrape, as evidence that the museum is selling off some of its best attractions. The museum is even selling its Lamborghini Espada, which Mr. Petersen once described as his favorite car design.

“This is the first time in 20 years that we’ve culled the collection,” Mr. Karges said. “It’s part of the museum business. It’s the same at art museums.”

Mr. Karges said the museum spent a year developing its list of sale vehicles. The decisions often came down to museum relevance and whether a car could be reacquired if needed through a loan. One car already sold, a 2006 Bugatti Veyron that was auctioned for $924,000 in March, cost the museum $30,000 a year to maintain, he said. And, since one of the museum’s board members owns two Veyrons, “we know where to find one if we need it.”

Jackie Frady, president and executive director of the National Automobile Museum in Reno, Nev., which has about 200 cars, described such sales as “a very traditional way of updating and modernizing your collection.” When the museum negotiates with a donor, she said, “we make it clear that the car is being accepted without any restrictions.”

But recent tax law changes have reduced donations of cars and complicated an already difficult financial picture for car museums, said Laura Brinkman, executive director and chief executive of the 130-car Auburn Cord Duesenberg Automobile Museum in Auburn, Ind. Her museum has 50,000 visitors a year, but the entry fee, at $12.50 for adults, amounts to only 5 percent of revenue. Events, memberships and gift shop sales bring in more, but she depends on donated cars to help fill a $500,000 annual gap in the museum’s $1 million budget.

Whereas donors were once able to write off the car’s appraised value, they can now write off only the sale price assuming the car is being donated expressly to be sold. It can take a museum more than a year to auction a car, and many donors don’t want to wait that long for a write-off, Ms. Brinkman said, adding: “We saw donations drop off in that category. That was a good source of revenue for us.”

Ken Gross, an auto writer who was the Petersen’s director in 1997-2000, thinks the sale and the museum’s plan to broaden its exhibits upholds Robert Petersen’s original vision. “If you look at his empire, he had car magazines, he had bike magazines, he had hot rod magazines,” Mr. Gross said. “Pete was always a promoter; he was always challenging you to come up with new things.”

Strong Sales Push Chrysler’s 2nd-Quarter Net Up 16%

Chrysler, the third-largest American automaker behind General Motors and the Ford Motor Company, also reported quarterly revenue of $18 billion, a 7 percent improvement from the period a year earlier.

Sergio Marchionne, the chief executive of both Chrysler and its Italian parent, Fiat, said the American automaker benefited from increased shipments of models like the Jeep Grand Cherokee.

“Chrysler Group is poised for a very strong performance in the second half of the year,” he said.

The company said it sold 643,000 vehicles worldwide in the second quarter, up 10 percent from the second quarter of 2012.

In the United States, Chrysler reported an 11.4 percent market share, up slightly from 11.2 percent in the period a year earlier.

Mr. Marchionne said that new products, including the introduction of a smaller Jeep model, would help sustain Chrysler’s momentum in the American market.

“The timing of product launches and capacity increases causes this year’s performance to be biased in the second half,” he said.

For the full year, Chrysler reiterated earlier forecasts of at least $72 billion in revenue, and net income of $1.7 billion to $2.2 billion.

The positive performance comes as Fiat and Chrysler move closer to completing a full merger of the two companies. While Fiat owns 58.5 percent of the American company, it is hoping to acquire the remaining shares later this year from a retiree health care trust.

A full merger of the companies would allow for more integration of their operations and finances. Mr. Marchionne has said it could be accompanied by a new stock offering to help finance global growth plans.

Chrysler’s results helped Fiat post a net profit of 435 million euros ($578 million) in the second quarter, up from 239 million euros in the period a year earlier.

Fiat said its revenue for the quarter was 22.3 billion euros ($29.6 billion), a 4 percent increase from the second quarter of 2012.

Without Chrysler’s contribution, Fiat said it would have lost 247 million euros in the quarter, about the same as in the period a year earlier.

Mr. Marchionne said that no agreement had yet been reached between Fiat and the health care trust on a price for the 41.5 percent stake the trust holds in Chrysler.

Although Fiat can apply Chrysler’s profits to its financial results, the Italian automaker cannot access the American company’s cash reserves.

At the end of the quarter, Chrysler said it had $11.9 billion in cash, a slight decrease from the $12.1 billion it reported a year ago.

Chrysler’s turnaround has accelerated since it paid off the last of its government loans two years ago.

The second-quarter results were the company’s eighth consecutive profitable quarter.

The profits were depressed slightly by a $151 million charge related to Chrysler’s recall and customer service action on 2.7 million older-model Jeeps. Last month, the company said it would add trailer hitches to some older Jeeps to help protect against fires caused by rear-end collisions.

Retail Sales Beat Expectations as Automobiles Surge

The Commerce Department said on Thursday retail sales increased 0.6 percent after edging up 0.1 percent in April.

Economists polled by Reuters had expected retail sales, which account for about 30 percent of consumer spending, to rise 0.4 percent last month.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.3 percent after rising 0.2 percent in April.

The increase in core sales offers hope consumer spending probably would not slow too much in the second quarter, after spending fell in April for the first time in a year.

Coming on the heels of data last week showing a steady pace of job gains and a jump in consumer confidence, the retail sales report hinted at underlying strength in the economy, despite belt-tightening in Washington, which is weighing on factories.

Sales rose in most categories, with receipts at auto dealerships rising 1.8 percent - the biggest increase since November - after advancing 0.7 percent the prior month. Excluding autos, sales gained 0.3 percent after being flat the prior month.

The increase in sales came despite a 0.2 percent drop in receipts at gasoline stations. Excluding gasoline stations, sales rose 0.6 percent.

Sales at building materials and garden equipment suppliers increased 0.9 percent after rising 3.6 percent in April. Demand for housing is boosting home building, which is helping to anchor the broader economy's recovery.

There were also gains in sales at sporting goods, hobby, book and music stores, which rose 0.6 percent. But receipts at clothing stores slipped 0.2 percent.

Sales at electronics and appliances stores fell 0.4 percent, while receipts at furniture stores dropped 0.8 percent.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Automakers Report Strong April Sales

DETROIT (AP) — Detroit was king in April, with demand for its big pickups helping to boost U.S. auto sales and offset a soft month for Toyota.

Ford, GM and Chrysler sold a total of 144,042 full-size pickups, up 29 percent from last April, driven by strength in the U.S. housing industry.

Overall sales grew 8.5 percent to nearly 1.3 million. While that's the industry's best April total since 2007, the pace slowed from the first three months of this year. On an annualized basis, April sales were 14.9 million, the first month below 15 million since October.

One reason for the slowdown: Toyota. The Japanese automaker's U.S. sales dropped by 1 percent, or around 2,000 vehicles, from last April. Alec Gutierrez, a senior market analyst with Kelley Blue Book, said he and other analysts underestimated the impact that increasing competition is having on Toyota.

Popular Toyota vehicles like the Corolla and Camry sedans lost sales to fresher models like the Hyundai Elantra and the Ford Fusion. Gas prices — which are 30 cents cheaper than at this time last year — hurt sales of the Prius hybrid, down 21 percent. Toyota's share of the market fell to 13.7 percent from 15 percent a year earlier, putting it behind GM and Ford.

Analysts still expect the industry to sell more than 15 million cars and trucks this year. Gutierrez is keeping his forecast at 15.3 million. That's up from sales of 14.5 million last year. The most recent high was 17 million in 2005, while the trough was 10.4 million during the recession in 2009.

"We're not reading too much" into the April number, Gutierrez said.

Ford, General Motors and Chrysler reported double-digit sales increases last month. Nissan led Japanese automakers with a gain of 23 percent, while Honda's sales rose 7 percent. Volkswagen sales dropped 10 percent, according to figures released Wednesday.

Detroit dominates the pickup segment, as U.S. buyers remain loyal to domestic brands despite efforts by foreign brands to win them over. Sales of Ford's F-Series, the best-selling vehicle in the U.S., rose 24 percent, while Chevrolet Silverado sales rose 28 percent. Chrysler's recently redesigned Ram pickup saw a 49-percent increase.

The gains bode well for second-quarter earnings, since pickups are among automakers' most profitable vehicles.

Truck sales have been strong all year because of customers like Adrien McFrederick, who recently put down a deposit on a 2013 Ram 3500.

McFrederick, 35, owns a marble and tile business, and needed to replace the 2007 Silverado he kept while work was slow. He started looking at Rams late last year after he and his wife bought a Chrysler Town and Country minivan.

Businesses like McFrederick's are getting a boost from a rise in home building, which increased 7 percent from February to March. A revived housing sector means higher sales of big pickups as companies and laborers return to the market. GM said its sales to small businesses rose 32 percent to 57,000 in April.

A different kind of business — natural gas drilling — is propelling sales at Chuck Eddy Jr.'s Chrysler-Dodge-Jeep-Ram dealership near Youngstown, Ohio. Eddy said energy industry workers from all over the country were coming in to buy trucks last month, keeping him in tight competition with a nearby Ford store.

"I'm selling heavy-duty trucks. We had people coming in from all over the country buying. We had a guy come in from Montana," Eddy said.

Jesse Toprak, a senior analyst for the TrueCar.com auto pricing site, said full-size trucks made up around 11.5 percent of sales in April, up from around 10 percent last year. He expects them to top 12 percent of total sales — or nearly 2 million vehicles — by the fall of this year, when truck sales are usually strongest. Full-size truck sales peaked at 15 percent of the U.S. market in 2004.

The growth in truck sales shows underlying strength in the economy, Toprak said, since small businesses won't buy them unless they're confident in the future.

No End to Falling European Car Sales

PARIS — European car sales keep falling, and American automakers are among the biggest losers in the shrinking market, industry data showed Tuesday.

European Union new passenger car registrations slid 10.5 percent in February from a year earlier, the European Automobile Manufacturers’ Association said in Brussels. It was the 17th consecutive drop, with sales falling everywhere except Britain, where they rose 7.9 percent.

E.U. sales, at 795,482 cars, came in at the lowest recorded for the month of February since the records started in 1990, Quynh-Nhu Huynh, statistical director for the automakers’ association, said.

She noted that in February 1990, new car sales totaled 1.1 million — at a time when the European Union had just 15 members.

The euro zone crisis, and the government budget-tightening measures prescribed to combat it, have hurt demand. Record unemployment has squeezed household budgets and left consumers reluctant to upgrade older models, and much of the younger generation lacks the means to purchase their first cars.

“Unless there’s a turnaround in the middle of the year, we appear to be headed for the worst performance ever,” Ms. Huynh said.

American automakers bore much of the brunt. General Motors’ European sales slid 20.1 percent, while Ford Motor recorded a 20.8 percent drop.

The European market sales of Volkswagen, the largest E.U. automaker, fell 7.2 percent, while the region’s No.2 carmaker, PSA Peugeot Citroën, fell 13.2 percent. Sales of Fiat, the Italian carmaker that controls Chrysler, fell 14 percent. Honda Motor led a handful of companies that posted gains, with its sales up 15 percent.

Ian Fletcher, an analyst at IHS Automotive in London, said that G.M., Ford, Fiat and Peugeot faced similar problems, with luxury carmakers reaching down to take their sales in a declining market, and cheaper models gaining at the bottom of the market.

“It’s the squashed middle market,” he said. “They’re facing pressure from the top of the market, from Mercedes and BMW, and pressure at the low end from the likes of Kia, Hyundai and Dacia.”

The U.S. carmakers, he said, are also suffering relative to other companies because they were less willing to offer buyer incentives, and were unable to match some rivals, particularly Volkswagen, on financing terms.

Mr. Fletcher said he expected car sales to grow this year in the United States, as well as in fast growing economies like China, Brazil, Russia and India.

He predicted that the European Union market, which shrank by 8.2 percent last year, was set for another 2.6 percent contraction this year, to around 11.8 million units.

There is hope, he said, that sales might bottom out before long, with gradual improvement possible by the end of the year. But with the monthly data as bad as they have been so far in 2013, he said, analysts might be looking at their forecasts again “in the next few months” for a possible downward revision.

Detroit Car Sales Climb Again

Auto executives said overall industry sales for the month would improve about 2 percent over the strong results reported in the same period a year ago.

The seasonally adjusted annual sales rate – a closely watched indicator for the industry – is expected to total about 15.5 million vehicles for February.

That seasonal rate bodes well for the industry going forward, as automakers ratchet up production to meet demand for their new products.

The Detroit auto companies all posted positive results during the month.

General Motors, the largest American automaker, said it sold 224,000 vehicles in February, a 7 percent increase from the same month in 2012.

All of G.M.'s domestic brands – Chevrolet, Cadillac, GMC and Buick – had higher year-over-year sales. Cadillac led the way with a 20 percent gain, primarily because of healthy sales of the new ATS compact sedan.

G.M. also reported increases in sales of its newest small cars, like the Buick Verano and the Chevrolet Spark. But its most prominent gains were in pickup trucks.

The company said that sales of the Chevrolet Silverado pickup rose 29 percent, and the GMC Sierra increased 25 percent. Executives attributed the performance to a surge in housing starts and the need for construction companies to replace older pickups.

“A significant tailwind for our industry is new home construction, which is creating jobs and fueling the demand for pickups,” said Kurt McNeil, G.M.'s vice president of United States sales operations.

The Ford Motor Company, the second-biggest Detroit auto company, said it sold 195,000 vehicles during the month, a 9 percent gain from a year ago.

Ford said that many of its gains came from sales of sport utilities such as the Escape and Explorer. The company’s redesigned midsize sedan, the Fusion, also had a good month, with a 28 percent improvement over last year.

Like G.M., Ford also benefitted from the surging demand for pickups. Ford said that it sold 54,000 F-series trucks during the month, a 15 percent increase from February of 2012.

Chrysler, the smallest of the Detroit automakers, saw its growth rate slow somewhat after several months of reporting double-digit increases.

The company said that it sold 139,000 vehicles in February, a 4 percent improvement over a year earlier. That is a smaller increase than Chrysler has reported in previous months.

“In spite of a cautious ramp-up of some of our most popular products, which limited inventory last month, we still managed to record our strongest February in five years,” said Reid Bigland, head of United States sales for Chrysler.

Chrysler’s best performers during the month were passenger cars such as the new Dodge Dart. Sales of its Ram pickup increased 3 percent, while sales of its Jeep SUVs dropped 16 percent.

The big Japanese automakers were to report results later Friday. Analysts expected Toyota and Honda to continue their steady comeback from inventory disruptions because of the earthquake and tsunami in Japan two years ago.

Volkswagen, the German automaker that is rapidly expanding its American operations, said it sold 31,000 vehicles in February, a 3 percent increase from a year earlier.