Carmakers report strong June sales, easing worries
DETROIT—From mini cars to monster pickups, sales of new cars and trucks surged in June and eased concerns that Americans would be turned off by slower hiring and other scary headlines.
Automakers sold nearly 1.3 million cars and trucks in June, up 22 percent from the same month last year. Chrysler posted its best June in five years. Sales soared at
The results allayed fears that the car market's momentum had stalled. U.S. sales were on track to reach 14.5 million after the first four months of the year. But the annual pace dropped to 13.8 million in May, as the stock market plunged and hiring slowed. June brought more worrisome news about jobs growth and consumer confidence.
But buyers didn't go away last month. In fact, June's sales pace rose to 14.1 million, according to Autodata Corp. And if sales stay at that level for all of 2012, it will be the industry's best year since 2007.
Falling gas prices, cheaper loans and new models like the
"If a family in Iowa's only mode of transportation is on the fritz, they are going to buy a replacement vehicle, even if Spain's economy is on the brink of collapse," says Alec Gutierrez, a senior market analyst at Kelley Blue Book.
Automakers also started their Independence Day promotions a little early and that juiced sales at the end of the month.
"In the last two weeks we really went all-out," says Bill Underriner, who sells
Colorful ads with holiday deals excited buyers, says Jessica Caldwell, a senior analyst with pricing site Edmunds.com. The Buick Verano small car -- one of Underriner's big sellers last month -- is now $239 per month for a two-year lease. That's $50 less than usual.
Low interest rates are making deals like the Verano's more attractive. The average interest rate on a 60-month new-car loan is 4.5 percent, down from 6.98 percent two years ago, according to Bankrate.com. Credit availability is also improving.
"The affordability of cars is probably at an all-time high," Chrysler Group sales chief Reid Bigland said last week.
Falling gas prices meant buyers were more likely to consider bigger cars and SUVs in June, not just the small cars that sold well at the beginning of the year. Jeep Liberty SUV sales rose 50 percent and the Ford Explorer jumped 35 percent. Gas averaged $3.43 per gallon at the end of June, down 41 cents from the end of March.
Pickup truck sales also improved as home building perked up. Chrysler's Ram pickup sales rose 12 percent and sales of the Ford F-Series -- which has long been the country's best-selling vehicle -- rose 11 percent.
At Chrysler, sales of the tiny
General Motors' sales rose 16 percent, with strong demand for the Chevy Malibu midsize sedan and Volt electric car.
Ford's overall sales rose 7 percent. The Escape small SUV posted its best month ever after a new version of the popular vehicle went on sale.
The sales were welcome news to investors, who have beaten down GM and Ford shares in recent days over losses in Europe. Ford's stock climbed 2 percent to close at $9.60, while GM's stock jumped 6 percent to $20.67.
Sales would have been slower if carmakers hadn't sold so many vehicles to government, commercial and daily rental fleets, says Jesse Toprak, vice president of market intelligence for the car buying site TrueCar.com. A little more than a third of all the cars GM sold went to fleets, up substantially from last year. Ford also sold a third of its vehicles to fleets, but that was about the same percentage as last year.
GM said that was just the way some sales were timed, and its fleet sales should fall this month.
Toprak thinks that even if sales soften a little, they're still on track to reach 14.4 million by the end of the year. That's better than last year's 12.8 million, and it's far better than the 30-year low of 10.4 million during the recession in 2009.
"This is a healthy and sustainable rate of recovery," he said.
Other automakers reporting Tuesday:
-- Volkswagen sales rose 34 percent on strong demand for two redesigned cars: the Beetle and the Passat.
-- Hyundai's sales rose 8 percent. Sales of the new Accent jumped 57 percent, while sales of the luxury Equus sedan rose 61 percent.
AP Auto Writer Tom Krisher contributed to this report.