Crain News Service report
DETROIT (July 8, 2013) — Sales of light consumer vehicles in the U.S. rose 9 percent in June, continuing a positive market trend and pushing the industry closer to its first 16 million unit year since 2007.
The June surge, in part due to revived demand for pickups and continued interest in compacts, pushed the half-year sales count up 8 percent to 7.8 million units, prompting some market analysts to boost their sales forecasts for the next couple of years. TrueCar Inc., for example, raised its outlook to 16.5 million in 2014 and 17.2 million in 2015.
Based on the half-year figures the seasonally adjusted annualized sales rate was raised to just shy of 16 million, or the highest annualized level since December 2007.
Sales of large pickups and compact utility vehicles propelled the market in June with sales in both segments climbing 21 percent or more. Demand for compact cars was also healthy last month with segment sales rising 15 percent.
Ford Motor Co. and Nissan Motor Co. led the way among makers, showing 13-percent gains each, while volumes at Toyota Motor Corp. and Honda Motor Co. rose 10 percent. At General Motors Co. sales advanced 7 percent from a year earlier, while Chrysler L.L.C. gained 8 percent.
What's driving the surge?
Replacement demand and "historically low interest rates irrespective of the conversations surrounding the Fed" are fueling continued growth for the auto industry, according to Ken Czubay, Ford Motor Co.'s vice president of U.S. marketing, sales and service.
The tailwinds — a rebounding housing market, falling gasoline prices and consumer confidence near a six-year high — "continue to be strong" and are "pretty forceful," he said.
"The industry had a great month in June, easily the best June in six years. We were within a tipping point of that magical 16 million [SAAR] mark," said Bill Fay, general manager of the Toyota division. "We expect the momentum to roll into the rest of the summer."
Mustafa Mohatarem, GM's chief economist, said, "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.
"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."
Truck demand set the pace for sales at the Detroit 3, while new models or redesigned cars or crossovers helped nearly every brand.
Chrysler's 8-percent increase was led by a gain of 23 percent at the Ram truck brand and an 11 percent advance in car deliveries. Ford tallied a 24-percent jump in F-Series pickups.
Deliveries of GM's Chevrolet Silverado and GMC Sierra advanced 29 and 32 percent, respectively, boosting sales 5 percent at GMC and 7 percent at Chevrolet.
"The fundamentals for continued industry gains in new vehicle sales remain intact," said Reid Bigland, head of U.S. sales for Chrysler Group, in a statement.
Among the trends:
- Double-digit increases for the month at four brands — Subaru, Porsche, Cadillac and Dodge — meant double-digit increases in each of the first six months of the year.
- The Detroit 3 car makers each gained market share in the first half, the first time that has happened in the first six months of the year since 1993.
- Sales of North American-made light vehicles made in hit 80.2 percent, the first time since 2005 that they were 80 percent or more. The percentage has risen steadily since 2009, reflecting the shift of Asian and European brands' production to North America.
- Japan's Big 3 car makers — Toyota, Nissan, Honda — posted increases of 10 percent or more for the first time in the same month this year.
- Five brands were down for the month and the first half: Smart, Mitsubishi, Lincoln, Kia and Volvo.
Item compiled from stories by Automotive News reporters David Phillips, Jesse Snyder and David Versical that appeared on autonews.com, the publication's website.