By Kasra Kangarloo

WASHINGTON (MNI) – U.S. auto sales rose to an annual pace of 10.7
million units in January, defying already positive forecasts, though
analysts’ expectations for upcoming data have not changed.

“There’s a pretty weak correlation between retail sales and autos,
but the [January] auto numbers do suggest upside risk,” Mike Englund,
economist at Action Economics, said in a telephone interview.

Englund pointed to a catch-up effect for Japanese automakers as the
primary reason for the bump in sales, as those companies have recovered
from both the lingering effects of the Thai floods and the Japanese
earthquake.

Toyota posted a 30.4% increase in car sales since January of last
year, while Nissan posted a 13.3% increase and Honda posted a 27.7%
increase.

“I think people are going to like the positive tilt going into
january, we have a pretty persistent upward trend in vehicle sales,”
Englund said.

Peter D’Antonio, economist at Citigroup, also noted the strength of
Japanese automakers, adding that the boost from those companies will
likely taper in coming months.

“The catchup seems to be reaching its limit, but that doesn’t mean
that autos aren’t going to continue to grow, we expect that path to
continue, but that path will be more gradual than what we’ve seen over
the last six months,” D’Antonio said in a telephone interview.

Steven Ricchiuto, economist at Mizuho Securities, defined the boost
in sales as a form of substitution by consumers — cars are cheaper due
to discounting by dealers and low interest rates — and not necessarily
a substantial improvement in demand.

Ricchiuto did, however, point to strong sales as a sign of
continued strength in the manufacturing sector.

“One of the reasons why the economy doesn’t have the risk profile
that you had a year ago is the incredible ability of the automobile
sector to keep things moving,” Ricchiuto said in a telephone interview.
“That should keep manufacturing on a healthy note.”

Strider Elass, economist at First Trust Advisors, said that the
sales figures suggested strong overall demand, but did not change any
forecasts for upcoming data.

“It’s showing that consumers are definitely spending, which is
definitely great news going forward, the consumer is stronger than most
have thought and it will continue to be that way for quite some time,”
Elass said in a telephone interview. “The consumer’s still alive and
doing well.”

— Kasra Kangarloo is a Washington reporter for Need to Know News

** Market News International Washington Bureau: 202-371-2121 **

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