Low interest rates and a brighter economic outlook drove U.S. new-vehicle sales higher for most major auto makers in June, allaying worries of a market slowdown and setting the industry up for a strong second half, reported The Wall Street Journal.
Industry-wide auto sales rose 1.2% to 1.4 million in June, pushing the annualized selling rate to 16.98 million, its highest pace since July 2006, according to market research firm, Autodata Corp.
For the first half of the year, auto makers sold a total of 8.2 million vehicles in the U.S., up 4.3% over the same year-ago period.
General Motors Co. continued to throw off worries over its massive safety recalls as consumers pushed up its June U.S. sales, while Fiat Chrysler Automobiles NV's sales soared on rising demand for its pickup and sport-utility vehicles.
Toyota Motor Corp. said its U.S. sales rose 3% in June over a year earlier, and Nissan Motor Co. reported a 5% gain. Hyundai Motor Co.'s U.S. sales rose 4% last month.
But it wasn't a good month for all. Ford Motor Co. sales fell 6% as it tapered sales to fleet buyers, such as car-rental companies, and prepared to launch a new, aluminum-bodied F-series pickup truck.
Honda Motor Co.'s U.S. sales declined 6% as demand for its passenger cars and sport utilities also fell. Volkswagen AG's U.S. unit reported a 22% decline for its namesake brand amid a lack of new-model rollouts.
After torrid sales in May, which included five weekends compared with June's four, analysts expected industry sales to cool. May had a seasonally adjusted annual selling rate of 16.77 million vehicles.
June had two fewer selling days than the same period a year earlier and was tarnished by a rash of safety recalls.
GM has recalled about 29 million cars and trucks in North America so far this year. This wave of recalls comes after GM waited more than a decade to fix a defective ignition switch on 2.6 million older-model small cars that prevented some air bags from deploying during a crash. The auto maker has linked the ignition-switch defect to at least 13 deaths in North American accidents.
"Everyone was expecting sales to fall off the cliff in June and that didn't happen," said Fred Diaz, Nissan's head of U.S. sales and marketing.
Encouraged by the surprisingly strong June, industry executives say demand remains on track to finish the year with U.S. new light-vehicle sales of more than 16 million. Demand also is aided by an aging auto fleet, with the average age of U.S. cars on the road about 11 years old.
"Incoming indicators are really consistent with a rebound in the economy," said Ellen Hughes-Cromwick, Ford's chief economist. "We've seen good improvement in manufacturing activity. Consumer sentiment has been in good stead, and incomes are gaining ground."
The year got off to a bumpy start with U.S. sales in January and February falling short of expectations due to severe winter weather across the Midwest and East. Auto sales picked up in late March and April, then surged in May, climbing 11% over a year earlier.
"We had an absolutely extraordinary May, and the good news is we had a strong June too," said Beau Boeckmann, president of Galpin Motors Inc., which owns stores in southern California. "We're continuing to see momentum in the industry and very positive signs."
GM said it had its best June in seven years, selling 267,461 vehicles. The 1% increase was mostly driven by higher demand for its new large SUVs, fleet sales and a double-digit gain in its Buick brand.
But sales of some models that faced stop-sales orders and recalls were lower. Chevrolet Cruze sales fell 21% amid a temporary halt to sales on some models. Malibu and Impala sales also fell 24% and 17%, respectively, while Cadillac passenger-car sales were down across the board.
Demand for pickups was uneven for the month. Chrysler's Ram was the only big brand to report a gain. GM's Silverado brand was flat and GMC Sierra sales fell 7%. Ford's F-series fell 11% over a year ago.
Ford's overall sales were 221,396, with its passenger-car sales off 1% over a year earlier.
Chrysler, which expanded an ignition-switch recall this week, sold 171,086 total vehicles in June for a 9% increase over the same month last year.
Truck and SUV sales, which made up 77% of total Chrysler sales in the month, improved 22%, while car sales fell 19%, hurt by double-digit declines in its Chrysler 200 and 300 sedans.
Toyota said it sold 201,714 vehicles last month in the U.S., topping analysts' expectations. The company cited double-digit gains in its recently redesigned Corolla and Camry cars.
"Sales in the first half of 2014 indicate a steadily recovering industry, and we expect this pace to increase as we move into the second part of the year," said Bill Fay, Toyota division group vice president and general manager.
