WRAPUP 1-Gas-sipping cars drive March US sales gain

* Fuel efficiency in focus as gasoline prices climb

* Rising oil prices could see buyers avoid light trucks

* GM, Toyota sales fall short of expectations

* GM shares up 4.4 percent, Ford up 1.7 percent

By Deepa Seetharaman and Ben Klayman

DETROIT, April 1 (Reuters) – Sales of small cars raced
ahead in March as buyers flocked to more fuel-efficient
vehicles, a trend major U.S. automakers expect to persist if
gasoline prices continue to rise.

In addition to gas-sipping cars, the improving U.S. job
market helped most major automakers race past expectations for
U.S. sales in March with the main exception being General
Motors Co (GM.N: Quote, Profile, Research), which pulled back on its incentives.

“When I look at the overall picture, I say ‘Hey, this
recovery’s intact. It’s still going strong in the U.S.,'” said
Gary Bradshaw, a portfolio manager with Hodges Capital
Management, which owns Ford shares. “More people going back to
work, they can afford cars.”

Executives at GM and Ford motor Co (F.N: Quote, Profile, Research), which reported
sales gains of 11.4 percent and 19 percent, respectively, added
that the Japan crisis was unlikely to bite into U.S. sales in
the near-term.

GM shares rose 4.4 percent to end at $32.41 on the New York
Stock Exchange on Friday, while Ford stock was up 1.7 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ March US auto sales 13.11 mln annualized rate[ID:nN01151672] Top-selling vehicles in US through March [ID:nN01171857] March US light vehicle sales major makers [ID:nN01278764] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Analysts said GM’s gain was larger because its stock has
been more volatile and investors were relieved by the good news
about the sector despite the lower-than-expected sales gain.

The strong sales, combined with the Labor Department’s
report on solid U.S. job growth last month, boosted hopes that
consumers will have more money in their wallets and feel
confident enough to buy more cars and trucks, investors said.

Auto sales, which represent one of the first snapshots
every month of U.S. consumer demand, finished March up almost
17 percent.

On an annualized basis, the rate for the month was 13.11
million vehicles, up from 11.78 million last year.

That was slightly below the 13.2 million rate 34 economists
polled by Reuters had expected. Results from GM and Toyota
Motor Corp (7203.T: Quote, Profile, Research) (TM.N: Quote, Profile, Research), two of the three largest
automakers, fell beneath eestimates.

The stronger-than-expected results at many automakers
echoed the good news on the labor front as U.S. employment on
Friday recorded a second straight month of solid gains in March
and the jobless rate fell to a two-year low of 8.8 percent.
[ID:nNOAT00477]

GM sales chief Don Johnson does not expect a “significant”
impact from the Japan disruptions on sales at this time, while
Ford said any fluctuations in manufacturing caused by last
month’s Japan earthquake, tsunami and resulting nuclear crisis
will not upset demand.

“The developments should not derail the recovery in the
U.S.,” Ford senior U.S. economist Jenny Lin said.

However, a Ford executive also warned that the company’s
inventory of small cars has been “pinched” by the heavy demand,
and other automakers are likely seeing the same thing happen.

GM and Ford executives said they expect U.S. sales this
year to finish between 13 million and 13.5 million, up from
11.5 million last year. Toyota officials said they expect
strong April sales.

However, some still worry that the rising gasoline prices
and the uncertainty caused by events in Japan could still hurt
sales in April and May.

“The recovery is fragile,” Edmunds.com analyst Michelle
Krebs said, adding that sales in March weakened later in the
month as gasoline prices rose. “The consumer does not like
uncertainty, and they had a heavy dose of it in March.”

LUCRATIVE LIGHT TRUCKS LANGUISH

GM said total U.S. sales in March for its four brands rose
11.4 percent from last year to 206,621 vehicles. Including its
four former brands — Hummer, Pontiac, Saab and Saturn — GM
sales rose 9.6 percent.

Edmunds had expected a gain of 11 percent including the
former brands, and TrueCar.com and JP Morgan also said the
results missed expectations.

GM’s incentives per vehicle on average were $600 to $800
lower last month compared with February, and the automaker
would be prudent with its deals going forward, Johnson said.

Ford, Chrysler Group LLC (FIA.MI: Quote, Profile, Research) and Nissan Motor Co Ltd
(7201.T: Quote, Profile, Research) all reported stronger-than-expected results and Ford
outsold GM for only the second time since 1998.

Chrysler sales jumped 31 percent, while Nissan’s rose 28.4
percent. Sales at Hyundai Motor Co (005380.KS: Quote, Profile, Research), Honda Motor Co
Ltd (7267.T: Quote, Profile, Research) and Daimler AG’s Mercedes brand rose 32 percent,
18.9 percent and 12.6 percent, respectively.

Sales at Japan’s Toyota, which has been affected heavily by
the Japan crisis, fell 9.2 percent.

However, the higher gasoline prices are pushing consumers
away from more lucrative light trucks.

Light truck sales, which include pickup trucks and sport
utility vehicles, make up a little more than half of U.S. auto
sales and account for a disproportionate share of profits at
the U.S. automakers because of their higher prices.

“With gasoline prices eclipsing $3.50 a gallon, consumers
are placing a high priority on fuel efficiency in every size
and kind of vehicle,” said Ken Czubay, Ford’s vice president of
U.S. sales.

Last month, sales of compact and subcompact cars accounted
for one-fourth of the industry’s total, up from 21 percent the
prior two months and 19 percent in December, Ford said.

Gasoline prices rose more than 3 cents to $3.60 a gallon
over the last week, the Energy Department said. The average
price of regular gas is 80 cents higher than a year ago as
conflict in Libya and rising tensions in the Middle East have
sent the cost of crude oil (CLc1: Quote, Profile, Research) to above $100 a barrel.
[ID:nN28206060]

Another focus is the aftermath of the Japanese earthquake
and subsequent tsunami last month which caused many supplier
plants there to close or cope with power outages.

Industry executives said they are monitoring the situation
closely, but have declined to speculate on its impact. GM’s
Johnson said the U.S. automaker has a “very good” level of
vehicle inventory going into April.

Ford said it is pursuing other sources of supply for
affected parts as necessary, but was able to maintain its
previously announced first-quarter production plans.

However, the U.S. automaker warned that further problems in
Japan in the weeks ahead could force it to reduce or idle
output, including suspending output at a truck plant in
Kentucky next week.

Nissan said it was shifting non-production days scheduled
for later in the second and in the third quarters to April.

The Japan crisis had little effect on March U.S. sales, but
the situation remained “very fluid,” said Bob Carter, Toyota
brand sales chief in the United States. The biggest impact will
be on the Prius hybrid, he said.

However, Toyota President Akio Toyoda said the Japan crisis
would hurt the automaker’s earnings. [ID:nL3E7F10FR]

Auto sales in Japan fell by more than a third in March,
marking the biggest monthly percentage decline since February
1974. [ID:nL3E7F10OH]

In Europe, several markets saw sales decline, but
automakers shrugged off for now the possibility of Japanese
parts supply problems. [ID:nLDE7300YI]

Sales in Canada posted healthy gains and in Brazil rose 12
percent. [ID:nN01234405] [ID:nN01216575]
(Additional reporting by Bernie Woodall in Detroit, editing by
Matthew Lewis)

WRAPUP 1-Gas-sipping cars drive March US sales gain