- Associated Press - Tuesday, March 1, 2011

DETROIT (AP) — The U.S. auto sales recovery picked up steam last month with all major car companies reporting double-digit gains.

General Motors Co. led the way with a whopping 49 percent U.S. sales jump compared with February of last year, followed closely by Toyota Motor Corp. with a 42 percent gain.

Nissan Motor Co. and Honda Motor Co. had gains of 32 percent and 22 percent, respectively, while Hyundai Motor Co. sales went up 28 percent.

Chrysler Group LLC and Ford Motor Co. showed much smaller increases, but Chrysler sales were still strong, with a 13 percent increase, and Ford came in at 10 percent.

The companies said Tuesday that consumers snapped up both cars and trucks, buoyed by a gradually improving economy, and the U.S. automakers pointed to strong sales of new models. But the sales gains, especially for GM, were juiced by sweeter financing and lease deals. While analysts weren’t ready to declare a price war — and GM denied starting one — they noted an increase in the deals customers were offered.

The auto industry website TrueCar.com estimated that automakers raised incentives 5 percent from January to February to an average of $2,708 per vehicle. Chrysler, Ford, Nissan and Toyota all sweetened deals by more than 6 percent for the month, the site said.

And the industry’s enthusiasm for a fast start to 2011 is tempered somewhat by a rapid increase in gas prices, due to both increased demand and a jump in oil prices amid unrest in the Middle East.

Also Toyota’s gain, while impressive, was compared with a bad month last year when a string of embarrassing safety recalls reached its peak.

Still, the gains for February were so strong that Ford’s top sales analyst told reporters the sales rate, when adjusted for seasonal differences and projected for a full year, may be the highest since the government’s “Cash for Clunkers” rebates juiced sales in the summer of 2009.

At GM, Don Johnson, vice president of U.S. sales, said GM boosted incentives early in the year to get off to a fast start and catch competitors off guard.

The automaker started the increases in January by raising incentives $400 per vehicle from December, mainly with low-interest financing and lease deals in Northeastern states. It stuck with the deals in February, leading to sales of more than 207,000 cars and trucks.

But MR. Johnson predicted GM would back off on incentives later in the year.

Automakers have attempted to wean themselves from incentives, trying to sell cars and trucks based on how much they improved quality, not how much they shaved off the sticker price. Incentives on average had been falling since the industry ran into financial trouble in 2009.

Mr. Johnson said GM did targeted incentives, mainly in the Northeast, during January and February. It offered to buy drivers out of leases and to give cash to loyal GM customers for trade-ins.

Yet Mr. Johnson vowed that GM would not return to its old ways of offering huge incentives just to move cars and trucks to keep factories running. As recently as March 2009, GM’s average incentive spending was $4,750 per vehicle, the highest level in a decade, the website Edmunds.com said.

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