U.S. auto sales exceeded expectations again in March, capping a better-than-expected quarter for the auto industry despite some signs of economic weakness, according to an April 3 Reuters story by Justin Hyde.

With all but two major automakers yet to report results, industry analysts said March sales were about 4 percent below last year's record levels. At a seasonally adjusted annual rate of about 16.8 million cars and light trucks, that pointed to what analysts consider a robust market.

If the annual rate of 16.8 million units holds up for the year, 2001 would constitute the third best year ever for auto sales.

Major automakers, aware that their industry is not bulletproof, continued to be cautious about their outlook for the next several months. Production cuts and costly rebates or other incentives were the norm across much of the industry, amid warnings that the second half of the year might not be so rosy.

GM's U.S. sales were down 5.1 percent in March, with car sales and truck sales down evenly. No. 2 automaker Ford Motor Co. said its vehicle sales fell a lower-than-expected 13.3 percent from record 2000 sales. The financially troubled Chrysler unit of DaimlerChrysler reported, meanwhile, that its total U.S. vehicle sales dropped 10 percent, led by a 22.6 percent fall in car sales.

Import automakers, especially most Asian makers, appeared to continue gaining share in the U.S. market. Toyota Motor, the No. 3 automaker worldwide, reported a 11.4 percent increase in sales. That was its best month ever, with nearly all of the gain coming from high-profit pickups and sport utility vehicles. Honda Motor Co. Ltd. said its sales were up 1.4 percent.

The results come in the wake of two reports suggesting that the worse might be over for the U.S. economy. The Conference Board's consumer confidence index rose in March for the first time in six months and showed consumers were optimistic about the next six months, despite waves of layoffs and a deflated stock market. A closely monitored indicator of manufacturing also rose for a second straight month from a decade low in January.

U.S. automakers cut production sharply in the first quarter after a sales slowdown at the end of 2000 created swollen inventories of unsold vehicles and forecast the first three months would be tough. At the beginning of the year, automakers were predicting total light vehicle sales of about 16 million vehicles, with sales slumping in the first half of the year and building in the second.

Instead, sales in the first quarter ran near an annual rate of 17 million vehicles. While sales fell from the record rate of a year ago, rebates and low-interest loans rose, keeping actual prices down about half a percent, according to GM. Ford, Chrysler and GM all kept up discount sales to business fleets and rental-car companies.

But automakers are still bracing for a slump, and for now are holding to their 16-million forecasts for 2001. Ford CEO Jacques Nasser told analysts last week he expected sales to slow in the second half of the year; GM's head of North American operations made a similar forecast last month. GM reiterated Tuesday that it will cut second-quarter production 17 percent to keep inventories in line.

Ford said second-quarter production would total 1,230,000 vehicles, a 7 percent decline from 2000. That figure includes a previously announced cut of 20,000 vehicles from its output of Ford Expedition and Lincoln Navigator full-size SUVs.

Those models, along with the segment-leading Explorer, have been very important to Ford's profits over the past few years. Explorer sales were down 21 percent, as the company ramped up production of new versions of the regular four-door model after a massive recall of Firestone tyres on Explorers linked to over 170 deaths in the United States.

Several luxury European automakers reported a strong month in March, with BMW AG, Land Rover, Saab and Audi all showing gains. Volkswagen AG said its sales were down 3.3 percent.