June auto sales best since 2007

New 2013 Ford Fusions are seen at an automobile dealer in Zelienople, Pa. (Keith Srakocic/AP)

The auto industry’s recovery continued in June, as U.S. buyers bought new cars and trucks at a pace not seen since before the great recession. Major American car makers reported higher sales, driven by demand for pickup trucks, small cars and cross-overs.

U.S. buyers were heartened by the signs of a strengthening recovery and took advantage of low interest rates and wider credit availability. Rising consumer confidence hit a six-year high in June, and rising home construction positively affected consumer demand for cars.

Detroit’s automakers all saw a healthy rise in profit. Ford said Tuesday that its sales rose 14 percent, while Chrysler’s gained 8 percent and General Motors’ rose 6.5 percent. Japanese automakers also reported solid gains, with Nissan’s sales jumping 13 percent and Toyota’s up 10 percent. Volkswagen’s sales dropped 3 percent, the third straight monthly decline for the German car company.

On a rainy weekday at Martens Volkswagen in Washington D.C., a prospective client was checking out a Jetta sedan. According to business manager Bobby Wallace, sales are picking up slightly. “We had a very good May, June was not quite as good, but sales for Volkswagen are steady,” he said.

As a city dealership, he finds that his clients prefer smaller cars that they can drive easily around town, like the small SUV Tiguan. Energy efficiency is addressed by Volkswagen’s TDI turbo diesel engine - yet Wallace notes that fuel economy is “not an over-riding concern” for his clients.

(The Washington Post)

Analysts say that the conditions are right for the sales momentum of the first six months of the year to continue. Auto loan rates remained near historic lows in June. The rate on a four-year new-car loan is averaging 2.7 percent, according to Bankrate.com.

According to Dave Cutting, the head of North American forecasts at LMC Automotive, a Troy, Michigan forecasts and market intelligence firm, key fundamentals are in alignment to continue the growth trend, as consumer confidence and the pickup in the housing market are also beginning to support auto sales. “The higher vehicle age also contributes to our projections for continued strength, as there is a lot of pent up demand”, he said.

I think the fundamentals for continued growth in the new vehicle sales industry are intact,” Chrysler’s U.S. sales chief, Reid Bigland, said last week.

As far as retail share is concerned, Jeremy Anwyl, vice chairman of Edmunds, noted that “GM is doing well so far, with a share increase of 11% over last month. Mercedes is down 12%, Nissan down 6% and not much change for the other manufacturers.”

Analysts estimate that U.S. auto sales rose 6 percent to 8 percent in June compared with the same month last year. The auto pricing site TrueCar.com predicts that dealers sold cars and trucks at an annualized rate of 15.7 million last month, the best rate since December 2007. LMC expects that number to be somehow lower, at 15.4 million.

Sales of pickups continued at a strong pace in June, as companies are replacing their aging trucks with new ones. Ford sold just over 68,000 F-Series trucks, up 24 percent from last June and its best June for trucks since 2005. GM sales of the Chevrolet Silverado jumped 29 percent to 43,259, while Chrysler Group sold nearly 30,000 full-size Ram pickups, up 24 percent from last June.

There is also increased demand for the cross-over and small car segments. According to Cutting, “consumers are accepting the transition to smaller cars with lower gas costs”, as “the miles per gallon is becoming a key consideration”. Gas prices, which averaged $3.60 a gallon nationwide in June and were higher than a year ago, seem to be steering some buyers to more fuel-efficient models. Sales of Ford’s recently updated Fiesta subcompact more than doubled to 9,363, while Chrysler sold nearly 6,500 Dodge Dart small cars.

As far as retail share is concerned, Jeremy Anwyl, vice chairman of Edmunds, noted that “GM is doing well so far, with a share increase of 11% over last month. Mercedes is down 12%, Nissan down 6% and not much change for the other manufacturers.”

Ford Motor truck sales increased by 19.9% from a year earlier, while Chrysler Group reported a 23% increase in sales of its Ram trucks. Small cars also saw impressive demand: Revenue from Ford’s compact sedans, the Fiesta, Focus and C-Max, was up 39%. At Chrysler, Dodge sales gained 12%, on strength from the new Dodge Dart.

Ford Motor Co. said F-Series pickup truck sales jumped 24 percent from last June to just over 68,000. It was the best June for the F-Series since 2005. Sales of the recently updated Ford Fiesta subcompact doubled over last year, while sales of the Focus small car gained 9 percent.



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