Rising consumer confidence combined with a rebounding construction industry pushed auto sales to near pre-recession levels in June.
Automakers sold about 1.4 million vehicles last month, a 9% gain from the same period a year earlier. The brisk sales amounted to an annualized pace of about 16 million, a threshold not seen since 2007.
“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, General Motors Co.'s chief economist.
Much of the growth came from booming truck sales, fueled by the recovering housing and construction industries. GM saw its biggest increases in pickup truck sales with about a 30% gain in June from the same month a year earlier.
“Trucks are hot. There is no question about it,” said Kurt McNeil, GM’s sales chief.
Both Ford Motor Co. and Chrysler Group posted 24% sales gains for their F-Series and Ram trucks, respectively.
But other buyers, especially consumers who are driving aging cars, are also heading into dealer showrooms, gravitating to small cars and crossovers, vehicles such as Ford’s Focus, Fusion, Escape, said Erich Merkle, Ford’s sales analyst.
GM sold nearly 33,000 of its Cruze, sub-compact sedans, a record for the automaker and 73% gain from a year ago. Honda Motor Co. sold nearly 32,000 Accords, a 10% improvement. Toyota Motor Corp. sold almost 36,000 Camrys, a 12% increase.
The surging auto industry reflects improvements in the broader economy and the housing market, Merkle said.
“If you take a look at consumer sentiment, it is running strong and that has a lot to do with what we were seeing behind the car sales numbers last month,” Merkle said. “As you see property values start to increase, people seem to feel better financially, and the stock market has been doing relatively well, despite some of the recent down days.”
Scott Anderson, chief economist of Bank of the West agreed.
“U.S. consumers are in the best financial shape they have been in six years,” Anderson said. “The amount of money they have to put aside to manage their debt load is at historically low levels while property values and stock investments are starting to rise.”
On Tuesday, real estate information firm CoreLogic said national home prices rose 12.2% this year through May compared with the same period in 2012.
Auto sales are also helped by low interest rates. Shoppers may be rushing to purchase cars worrying that loan rates will take rise like they have for home mortgages in recent weeks, Anderson said.
Other economists aren’t convinced that surging car sales signal a broad economic recovery.
"What is going on here is people who did not buy a car in the recession and then didn’t buy a car after the recession because the economy was so weak are starting to turn in their clunkers.” said Ken Goldstein, an economist with the Conference Board.“It is not because they feel more confident or have more money; it is because they need a new car.”
While people are buying cars, they are not rushing out to purchase furniture and appliances, which would signal greater confidence in the economy.
“We are going to get there, but it will be another six to nine months,” Goldstein said.
Carmakers anticipate even better sales ahead.
“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’s U.S. group vice president and general manager.
Here’s how the automakers did in June:
GM posted its best month for U.S. sales in almost five years. The automaker said sales rose 6% to 264,843 vehicles over the same month a year earlier, the highest total since September of 2008. Booming truck sales, linked to the recovery of housing and construction, were responsible for much of GM’s growth. Sales of the Chevrolet Silverado and GMC Sierra pickup increased 29% and 33%, respectively.
“GM's growth goes beyond trucks, though,” said Alec Gutierrez, an analyst with auto information company Kelley Blue Book. “Growth in the small car and crossover segments has also helped to move the needle for GM with their Cruze and Equinox showing strong gains,” he said.
Ford reported a healthy boost in sales for the month, a 13% year-over-year increase, thanks in large part to the automaker’s F-series trucks. This was the best June for Ford trucks since 2005, in fact, with sales up 24% to take the F-series into its 23rd consecutive month of increases.
Chrysler posted its best June since 2007 with sales up 8% year-over-year, the automaker reported.
“Chrysler is weaning itself some from the outsized percentage of daily rental car sales it had been selling, which puts the automaker in a healthier financial position," said Michelle Krebs, an analyst with auto information company Edmunds.com.
Toyota's sales increased 9.8% in June compared with the same month last year, the automaker reported.
Toyota also noted that its Camry -- the top-selling passenger car in the U.S. for the last 11 years -- surpassed 10 million units in total sales, making up 20% of all vehicles the automaker has sold in the U.S.
American Honda Motor Co. reported 9.7% growth in June sales on the strength of the popularity of crossover vehicles and minivans.
The increase came despite continued weakness in the automaker's Acura luxury division, which saw sales decline by 10.4%, to 13,765, compared with last June. The recent release of a redesigned flagship Acura RLX sedan failed to pull Acura out of its slump.
Nissan sales rose nearly 13% to 104,124 vehicles compared with the same month a year earlier. The automaker’s Altima sedan led in total numbers, with 26,904 units sold for a 23% gain. Meanwhile, the compact crossover sport utility vehicle Rogue jumped 41% in sales, setting a June record of its own with 15,518 units sold.
“A lot of the marketing offers and price cuts have helped bring interest to the Nissan brand recently,” said Jessica Caldwell, an analyst for Edmunds.com.
Nissan reported its electric Leaf had its second best sales month ever, with 2,225 EVs sold, an 315% increase over last June.
Hyundai reported moderate gains, with sales up 2% over the same month last year for a total of 65,007 units sold in June.
While most automakers posted sales gains in June, Volkswagen saw its business decline because of a dearth of new models. The German company said its U.S. sales fell 3.2% to 36,957 vehicles last month compared with the same period a year earlier.
“Gains in the Jetta and Passat were offset by a rather significant decline in the Golf, which has seen a decline as consumers hold out for the 2014 redesign expected to drop later this year,” said Kelley Blue Book's Gutierrez.
[For the record, 1:45 p.m. July 2: An earlier version of this post said industry auto sales rose 6%. The correct number is 9%.]
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