DETROIT -- Don't look now, but there's a recovery under way in the auto industry.
It's easy to miss. The industry's lackluster sales numbers since the beginning of the year have provided little cause for celebration.
The most recent figures showed sales of U.S.-built cars through the first 20 days of March up only 1.2 percent over last year, when sales were particularly weak because of the Persian Gulf war. Sales for the last 10 days of the month, released yesterday, showed that sales of passenger cars slipped 1.2 percent from year-earlier levels.
But the closely watched car sales reports that dribble out every 10 days don't tell the whole story.
Truck sales, for example, are way up. Rebates, on the other hand, are down -- reflecting a firmer market in which consumers don't have to be bribed with quite so much cash.
And with the Big Three U.S. automakers weaning themselves from the crutch of massive, less profitable fleet sales to rental car companies, retail sales to consumers account for a significantly higher proportion of total sales than they did last year.
All this means that despite year-to-year comparisons that look nearly flat and annualized selling rates that fluctuate from week to week, the vehicle market has begun a slow ascent out of its deep trough.
"It's not a Jack-in-the-Beanstalk kind of recovery," said analyst Maryann Keller of Furman Selz Inc. in New York. "It's the kind of recovery you have to sift through the weeds to find."
Dealers, among those searching most anxiously for a flower in the economic weed garden, have signaled their optimism by ordering more vehicles from manufacturers. Many report that their showrooms, which had begun to resemble ghost towns bereft of all inhabitants except a pared-down sales staff, have seen more traffic in recent weeks than they have in months.
"They're not just tire-kickers, either," said Peyton Kramer, who ordered 200 new cars and trucks last month for his Redondo Beach, Calif., Ford dealership. "People don't go out and tire kick in the rain, and we've had a lot of rain. They're buyers."
Low financing rates and deep discounts on cars and trucks have been available for more than a year.
But if consumers have had the ability to buy new cars over the past year, they have until recently lacked the will. Now, with consumer confidence rising and those who refinanced their homes finding more cash in hand, more people are ready to commit themselves to a few years of car payments.
Demographics help explain the increase in truck sales. Minivans, which are considered trucks, are the vehicle of choice for many baby boomers returning to the car market after four or five years.
But the truck-sale boom -- sales of domestically built trucks rose more than 13 percent in March compared to the same period last year -- also points to the hidden recovery in retail car sales.
Last year, to keep sales up and plants running, the Big Three sold about 1.4 million cars to rental car companies at a discounted rate, Ms. Keller, the analyst, estimated. These cars, which the manufacturers repurchased after only four months of service and sold to dealers as used cars, cost the Big Three more than $3 billion in lost income, he said.
The problem was, once consumers saw these nearly new and deeply discounted cars on dealer lots, many of them abandoned their plan to buy a new car in favor of the cheaper substitute. Analysts estimate that nearly 80 percent of the so-called program cars were sold to prospective new car buyers, slashing the manufacturers' more profitable new-car retail sales by the same amount.
To get out of this vicious cycle, each of the Big Three has lengthened to about six months the period before they will buy back cars from rental companies. That means selling about 300,000 fewer program cars this year.
Chrysler Corp., which sold 256,000 cars to rental fleets last year, plans to cut back to 200,000 this year and 150,000 in 1993.
Both Ford and Chrysler say retail car sales are up more than their overall sales. But when this year's car sales are compared to last year's, they don't look like much. That's why trucks, which were never sold to rental companies in large numbers, are a better indicator of the current level of consumer demand.
The fact that the Big Three have been able to sustain strength in retail sales, while cutting back on rebates, suggests a resilience in demand and an improved profit picture. The average rebate during the first three months of the year fell about $250 from the fourth-quarter high of $1,100, said Joseph Phillippi, who follows the auto industry for Shearson Lehman Bros.
In the face of such numbers, some investment analysts are predicting more favorable earnings estimates for the Big Three and their suppliers. But they warn that the auto industry's nascent recovery has a long way to go. And it is not going to happen overnight.
"It's the kind of thing where you'll wake up in the morning and the recovery will be there, but all the way along it didn't feel like it was happening," Ms. Keller said.