Sales of new vehicles held steady in June after taking an unexpected slump the month before, with several automakers posting the sort of incremental gains that kept the auto industry pointed towards another record year.
Fiat Chrysler Automobiles, Ford Motor Co., Nissan and Honda all reported sales increases. But Toyota reported a 5.6% drop in sales, its Lexus brand off by 1.3%. It was a split decision for several makers, the Honda brand up, its Acura luxury marque losing 27%. And while Volkswagen continued to feel the effects of its diesel scandal with a 22% decline, its Audi arm scored its 66th consecutive monthly sales gain.
The industry, overall, was expected to ring up to a record $51 billion in new vehicle sales for the month, in part by “maintaining a reasonably disciplined approach to incentive spending as the overall pace of sales expansion moderates,” said Oliver Strauss, chief economist for data tracking firm TrueCar.
That would be a 7.4% year-over-year increase in revenues. Incentives, meanwhile, averaged about $3,116 per vehicle, up 8.6% compared to June 2015 – though they actually dipped slightly compared to May when consumers suddenly put the brakes on car buying. That was something of a surprise, as some analysts had foreseen a rapid rise in givebacks to rebuild sales momentum.
Among major makers, Fiat Chrysler reported a 7% increase, translating into the group’s best June sales in 11 years.
“Strong Jeep and Ram Truck brand sales fueled our best June sales in 11 years,” said Reid Bigland, senior vice president – Sales, FCA – North America. “In spite of some severe stock market volatility in June, the American consumer stayed focus on buying new vehicles and propelled FCA to six vehicle sales records last month.”
Ford’s June sales were up 6%, with on strong truck sales, which have climbed 13% through the first half of the year, said Mark LaNeve, vice president, U.S. Marketing, Sales and Service.
“Strong customer demand has helped us continue growing our truck leadership position, further widening the gap with our nearest competitor versus last year,” LaNeve said. “Consumer demand for Ford SUVs also continues to surge to all-time highs, allowing us to introduce new levels of capability, versatility and technology to a whole new generation of SUV fans.”
GM maintained its focus on retail sales, willingly taking a hit on the lower-profit fleet side of the business – continuing a strategy it launched last year. Direct sales to the consumer rose 1% for the month, even though fleet volume was off 22%. Combined, that meant an overall 2% dip for June.
“Positive economic indicators like historically low interest rates, stable fuel prices, rising wages and near-full employment provide the environment for strong auto sales to continue in the second half of the year,” said Mustafa Mohatarem, GM’s chief economist. “These positive factors continue to point toward another record year.”
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Nissan Group said its June sales increased 13% over the prior year and a June record , with the Nissan Division finishing June up 13%, also setting a June record.
Despite its weak performance in June, Toyota officials put a positive face on the results.
“The auto industry had its best first half since 2000,” said Bill Fay, group vice president and general manager, Toyota division. “Toyota remains the No. 1 retail brand for the first half, and anticipates record sales for the year for our light trucks as availability continues to strengthen.”
As a group, American Honda reported a 3.2% increase for June, driven in part by its increasing focus on light trucks. With the addition of the newly revived Honda Ridgeline pickup, the truck side of the company gained 2.2% for the month.
“With the all new Ridgeline pickup and the redesigned Accord Hybrid back in the lineup, we’re continuing to expand and strengthen our portfolio as we look toward a third straight year of record results,” said Jeff Conrad, senior vice president and general manager of the Honda Division.
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Audi reported that its June 2016 sales increased 1% increase, which was the brand’s 66th consecutive monthly sales record in the U.S. Audi has largely escaped unscathed despite have several of its TDI models sidelined because of the ongoing diesel scandal that resulted in a $14.7 billion settlement with the government by parent Volkswagen this week.
The VW brand itself hasn’t fared nearly as well, and saw sales sink by 22% in June despite generous incentives. Prior to the revelation last September that the maker had cheated on emissions tests, diesels accounted for about a quarter of the brand’s total U.S. sales.
Despite the increasingly competitive nature of the market as the frantic sales growth of recent years begins to mediate, manufacturers have not resorted to big increases in incentives, at least not just yet. Low interest rates have certainly been a factor, analysts suggested.
Kelley Blue Book estimated the average transaction price for light vehicles in the United States was $33,652 in June 2016. New car prices increased by $655 or 2% from June 2015, while rising $31 from May of this year.
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“It is no surprise that strength in trucks and SUVs continue to drive up average transaction prices and help brands with models in these segments,” said Tim Fleming, analyst for Kelley Blue Book. “In particular, mid-size trucks stand out as one of the strongest segments with prices up nearly 9% in June 2016. With full-size trucks now averaging $47,000, a large gap still exists to the segment’s midsize counterparts, which sit closer to $32,000.”
(Paul A. Eisenstein contributed to this story.)