Then came a turn of the ignition April sales reports from the Big Three automakers. GM led the way with a 13 percent increase in sales. Chrysler posted a 3 percent gain. And even beleaguered Ford's report that its sales shrank by 7.4 percent for the month had a silver lining of sorts the drop was mostly due to fallen fleet sales to rental-car agencies with post-Sept. 11 travel woes; this April's sales to actual people was as good as last year's. And besides at least it was Ford's first single-digit decline of the year.
GM, lifted by a 24 percent gain in sales of pickups, SUVs and minivans and suddenly the king of Detroit again, estimated that the industry's total U.S. sales would be up about 2.5 percent for the month. (Toyota, Honda and Volkswagen also posted inched-up U.S. sales numbers Wednesday.) That puts the industry on an annual U.S. sales pace of some 18 million vehicles, far stronger than originally estimated and enough if they can keep it up for carmakers to log one of the best U.S. sales years in history.
Wall Street's bulls lapped up the news that the nation's highest-profile manufacturers and one of its handiest gauges of consumer sentiment were feeling flush, and staged a stirring comeback in a season that hasn't seen many of those. By the closing bell, the Dow was up 113 points, and had crossed back over the 10,000 mark (for the 15th time).
So, can carmakers keep it up? The industry's recent history is well-told by now. Zero-percent financing deals, fat incentives and a burst of patriotism produced a spectacular bounce-back for the industry from the post-Sept. 11 flatline, (helping us speed through the recession in the process). That spike softened quickly, but suddenly the sales resurgence in April, after a fall in March, had investors and economists alike thinking that maybe, just maybe, this recovery might not be so lousy after all.
So, apparently, do the Big Three. Just Tuesday, GM in a rather confident move that should have tipped everybody off to its coming good news announced that its zero-percent days were over, and other carmakers have similarly scaled back on the sweet deals that have propped up sales but kept profits down.
Will customers keep coming without them? Again, it was the carmakers' optimism about consumer demand that cheered investors: GM now plans to crank out 12 percent more vehicles this Q2 than last year's. Chrysler, similarly sunny, will operate 14 of its 17 assembly plants on overtime in the second quarter. And Ford? Well, Ford does expect the fleet-sales business to pick back up as soon as the travel industry does.
Cleaned-out inventories and perked-up production are just what economists are looking for out of a recovery, and a strong auto sector can do plenty for jobs, incidental consumption and the broader economy hence all the good feeling among investors. But car buyers had better come through and keep buying those high-margin trucks, SUVs and minivans no matter what gas prices do this summer or else Detroit and Wall Street both stand to lose a pretty big bet.