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March Sales Up, But Gas Prices Could Drag Them Down

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On: Wed, Mar 30, 2011 at 12:36PM | By: Tim Healey


March Sales Up, But Gas Prices Could Drag Them Down

Sales of new cars appear to have increased in March, with the expectation that they'll be about 12 percent better than they were last year. However, high fuel prices and supply line disruptions due to the natural disasters in Japan could act as a brake on sales.

Economic analysts often look at auto sales as one of the first monthly indicators of what's going on with the economy, and the market is expected to have shown improvement over last year. However, lower incentives in March might cause sales to dip compared to February.

Investors are still bullish on the auto industry's recovery, though. They point out that the problems in Japan and rising fuel prices are things that can be temporary problems. Otherwise, most analysts see positive signs for the industry.

Some of those signs: An aging fleet, the rising cost of used cars, and a financial market that is getting better.

Sales reports from automakers will be released on Friday.

Perhaps the biggest area that high gas prices will impact is the light-truck market, which is generally profitable for automakers. Light truck sales (including SUVs) make up more than half of the U.S. market and also account for a lot of profits at U.S. automakers. If sales shift to less-profitable smaller cars that could negatively impact the automotive recovery.

As far as any disruptions from the troubles in Japan, those problems are more likely to pop up in April or May.




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