Strong demand for pickups and other light trucks helped deliver the best June the auto industry has seen since the beginning of the long U.S. recession – several makers reporting their best sales ever.
While industry officials acknowledged the “volatility” of the economy could yet deliver a setback – much as Wall Street traders experienced last month, the general mood is growing increasingly upbeat with June sales numbers solidly exceeding most analysts’ full year forecast.
“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,” said Jonathan Browning, CEO of the Volkswagen Group of America.
VW was, in fact, one of the few brands to report a downturn for the month, though that came after a strong surge earlier this year that saw the German maker post its best numbers since the era of the original Volkswagen Beetle. And while the VW brand itself fell 3.2% for the month, the sibling Audi brand reported a record June and its 30th consecutive month of increases.
Paced by strong demand for pickup trucks and, at the other extreme, fuel-efficient passengers cars, the auto industry continued to bolster the U.S. economy in June. The Seasonally Adjusted Annual Rate, or SAAR, appeared to reach the 15.8 million level, according to General Motors, well ahead of the 15.5 million SAAR most analysts had been forecasting for all of 2013. That would mark the industry’s hottest pace since November 2007.
GM, Ford Motor Co. and Chrysler Group all posted gains, as did the major Japanese brands, Toyota, Honda and Nissan – with little Subaru reporting one of the strongest surges of any brand, an increase of 42% for June. Subaru was, notably, the only automaker to post annual sales increases throughout the industry’s long recession.
A couple other brands showed signs of cooling down – though even with a modest 2% increase for the month, Hyundai CEO John Krafcik noted in a tweet that the maker had set yet another all-time sales record. Porsche was another maker bragging that it not only had its best June ever but its best month since entering the U.S. market.
While Detroit’s Big Three makers didn’t set records, they had their best month, collectively, since the auto recession began. Ford’s U.S. sales were up 13% year-over-year.
“In June, we continued to see strong demand across the entire lineup,” said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service.
The maker experienced particularly strong sales at both ends of its line-up, with solid demand for small cars like the Fiesta, C-Max and Focus up 39%, while pickup trucks also flew off dealer lots. The maker’s big F-Series achieved its 23rd consecutive monthly sales increase.
GM reported increases by all four of its U.S. brands, driven in part by a 4% jump in passenger car sales. But demand for trucks, including the Chevrolet Silverado and GMC Sierra pickup, gained 8%.
“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,” said Kurt McNeil, vice president, U.S. Sales Operations. New versions of the Silverado and Sierra trucks will be two of the most important introductions for GM during the 2014 model-year.
Chrysler’s 8% gain for June was also driven by solid truck sales, particularly for its big Ram 1500 pickup which was named North American Car of the Year last January. But Chrysler officials acknowledged the Jeep brand was off its pace due to the slowdown of production as it switches to the 2014 version of the Grand Cherokee and prepares to launch an all-new model, the smaller Jeep Cherokee.
Even the imports benefited from the truck boom which analysts said reflects the revival of the U.S. housing market. Honda’s midsize Ridgeline pickup gained 32.7% compared to June 2012 and its CR-V, Pilot and Odyssey models set monthly records.
Toyota also benefited from the truck surge. The Japanese giant – which overtook GM last month as the best-selling brand at a retail level – posted an overall 9.8% increase. But its truck division was up 14%, both the midsize Tacoma and full-size Tundra growing by double-digits.
“The auto industry led the economic recovery through the first half of 2013, kicking off a strong summer selling season, which we expect will carry into the second half of the year,” said Bill Fay, Toyota Division group vice president and general manager
Nissan also benefited with demand at both ends of the market spectrum, from the small Versa to the full-size Titan. But while the Japanese maker’s overall 12.9% sales increase yielded a new record for June, its Infiniti luxury brand dipped 12%.
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.
Ford and Honda both commanded record pricing during June, TrueCar reported, while GM came up just $1 short of its own all-time high.
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.”
Paul A. Eisenstein contributed to this report.
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