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June Car Sales Exceed Expectations

Sales strong for small cars as well as pickups.

by on Jul.02, 2013

Resurgent demand for pickups helped boost June sales.

With brisk sales of pickup pick-up trucks leading the way, Detroit’s Big Three makers reported their strongest sales since the beginning of the industry’s slump, while Hyundai came in with an all-time record despite pushing the limits of its production capacity.

But while most of the other major makers set to report today are expected to show stronger-than-expected results for June, not everyone had a good month. After posting its best numbers in decades, Volkswagen of America sales continued to cool in June.

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June’s strong performance defies some skeptics worried about a slowing of the economy, especially in the wake of the month’s poor stock market performance.  But Reid Bigland, Chrysler Group LLC’s U.S. sales chief said, “I think the fundamentals for continued growth in the new vehicle sales industry remain intact.”

Demand also grew for small cars, like the Dodge Dart.

The Chrysler Group reported an overall 8% increase compared to June 2012 as the automaker posted its best June sales figure since 2007 and extended its streak of year-over-year sales gains to 39-consecutive months.

The Chrysler, Jeep, Dodge, Ram Truck and Fiat brands each posted sales gains in June compared with the same month a year ago. The Ram Truck brand’s 23% increase was the largest sales gain of any Chrysler Group brand.  Meanwhile, Fiat brand sales were up 1% in June compared with the same month a year ago. It was the brand’s best June sales since the Fiat 500 was launched in 2011 and its 16th-consecutive month of year-over-year sales gains. The Italian division is expected to pick up momentum with the recent launch of its new 500L people-mover.

Ford Motor Company’s U.S. sales grew 13% compared with a year ago, marking Ford’s best June sales results since 2006.

Ford small cars – including Fiesta, Focus and C-MAX –  gained 39% over last year, marking the marking the maker’s best June performance in that growing segment in 13 years. But Ford – like rival Chrysler – also appeared to be benefitting from a recovery in the housing market which has been driving solid demand for full-size pickups.  The Ford F-Series posted its 23rd consecutive monthly sales increase.

“In June, we continued to see strong demand across the entire lineup,” said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service. “We’re particularly encouraged by strong retail share gains, especially in coastal markets, where the combination of great design and fuel economy is resonating with customers – including many buying a Ford for the first time.”

General Motors reported its best sales for any month since 2008, June coming in 4% above last year’s tally.  But demand surged 8% on the truck side, which included pickups, vans and SUVs. All four GM brands posted higher retail sales, with Chevrolet, GMC and Cadillac increasing by double-digits.

“Our Chevrolet, Buick-GMC and Cadillac dealers reported strong retail deliveries across the board in June and for the first six months of the year,” noted Kurt McNeil, vice president, U.S. Sales Operations.  “We have good momentum heading into the second half of 2013: the economic outlook is solid and our launch vehicles are performing well in the marketplace.”

GM estimated that the industry’s seasonally adjusted annual selling rate, or SAAR, for light vehicles came to 15.8 million units for June. If that proves accurate when the rest of the industry weighs in it would be the highest level since November 2007. It also would be well above the 15.5 million estimate that many industry planners are now holding to for all of 2013.

Meanwhile, Nissan U.S. sales were up 12.9% to 104,124 units, a new June record – though sales by the luxury Infiniti brand declined by 12%.

Hyundai gained 2% for the month, which U.S. CEO John Krafcik tweeted was an all-time recordfor the Korean carmaker. The maker also set a record for the first half of the year. Sales were led by demand for the compact Elantra, up 26%. Hyundai officials have cautioned that they are pushing the limits of production capacity, both in the U.S. and South Korea, which could limit further gains as the American automotive market continues to recover.

The big surprise for June was delivered by Volkswagen, which reported a 3.2% decrease in sales for June. While VW’s sales pace was anticipated to moderate this year, the company has achieved significant, double-digit growth over the past few years by expanding its line-up, pushing high-mileage diesels and by adding a new U.S. plant in Tennessee.

“Volkswagen achieved a number of sales milestones in June, including our best-ever TDI Clean Diesel sales, a strong indication of our leadership in this area and growing consumer demand for our fuel efficient technologies,” said Jonathan Browning, President and CEO Volkswagen Group of America.

“While we are cautious in terms of the economic outlook, we expect our sales pace to remain steady in the second-half of the year,” Browning added.

The June jump in car sales actually tells only part of the story.  The average transaction price (ATP) consumers paid for new cars increased in June – a figure that includes both incentives and options – climbed by 2.0% compared to year-ago numbers, at $31,125 for the industry overall, according to an estimate prepared by TrueCar.com. Transaction prices were up 0.5% from May of this year. The only time the ATP was higher came last December.

“Consumer confidence is continuing to fuel demand for new vehicles and consumers’ preference for high-contented vehicles is sending prices higher,” said Jesse Toprak, senior analyst for TrueCar.

Meanwhile, automakers slashed incentives an average 0.6%, year-over-year, to $2,537 for the typical vehicle.

Industry officials did express some concerns about the economy, Chrysler sales chief Bigland noting last Friday, “There’s been a tremendous amount of volatility. But the economy is objectively getting better,” he added, pointing to “the housing market (which) is showing new signs of life and other fundamentals, such as credit and the availability of credit, (which) have moved into positive territory.”

His positive outlook was echoed elsewhere.

“America’s families are better off than they were at the beginning of the year and they believe – with good justification – that the economic expansion is going to continue,” said Mustafa Mohatarem, GM chief economist. “Even moderate economic growth will be enough to keep the auto sales rate in the second half of the year at healthy levels around the mid 15 million-unit mark.”

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