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June auto sales defy predictions; Chrysler has best June in 7 years

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Auto sales beat expectations in June with GM, Toyota, Chrysler, Nissan, Hyundai posting gains
Despite massive recalls, GM sales climb 1% in June
Ford and Volkswagen posted declines in auto sales last month

June auto sales beat expectations with Chrysler, Nissan, Toyota and Hyundai all posting healthy gains compared with the same month a year earlier. General Motors had a small increase and Ford’s sales declined.

June new car sales approached 1.4 million, about the same as a year earlier. Most analysts were forecasting a 2% to 3% decline for the month.

“The industry seems quite healthy compared to both May and year ago levels,” said Erich Merkle, sales analyst at Ford Motor Co.

Auto information company Edmunds.com said auto sales were “strong” considering that the number of days that automakers could sell cars this past month was two fewer than June 2013. Some states limit which days autos can be sold.

Automakers are on a pace to sell about 16.2 million vehicles in the U.S. this year, which would be the biggest sales volume since 2006.

General Motors said it sold 267,461 vehicles in the U.S. in June, up 1% from the same month a year earlier.

GM's sale rose despite having recalled about 26 million cars this year - more than the entire industry last year - to deal with a variety of safety defects. The automaker is recalling cars to fix faulty ignition switches on a wide range of models that are linked to 16 deaths and dozens of crashes. 

Earlier this week, the automaker announced details of a compensation plan that will pay millions of dollars to the victims.

“General Motors once again proves its amazing resiliency,” said Michelle Krebs, an analyst with car shopping company AutoTrader.com. “Better than expected sales in June were reported against a backdrop of ugly news, from the unveiling of the victims’ compensation plan to another massive recall.”

Ford’s sales fell 6% to 222,064.

Chrysler Group posted sales of 171,086 units, a 9% gain and its best June sales since 2007.

Its Jeep, Dodge, Ram Truck and Fiat brands all posted year-over-year sales gains increases. Jeep had a 28% increase and its best-ever sales in the month of June.

Toyota had U.S. sales of 201,714 units, a 3.3% increase from June 2013.

“Sales in the first half of 2014 indicate a steadily recovering industry, and we expect this pace to increase as we move into the second part of the year,” said Bill Fay, Toyota division group vice president and general manager.

Nissan’s sales reached 109,643 vehicles, a 5.3% increase over the prior year and a June record. Subaru reported sales of 41,367 last month, a 5% increase and the company’s best-ever June sales. Mazda sales rose 16.5% to 26,208 vehicles.

Hyundai sold 67,407 vehicles last month, up 3.7%. The automaker completed its best-ever first half of the year – selling 364,434 vehicles -- and best-ever single sales month for its Sonata family sedan, garnering sales of 23,672.

The Volkswagen brand had the weakest performance of the major automakers in June, selling 28,827 vehicles, a 22% decline from the prior June.

The industry’s sales through the first half of 2014 are expected to reach 8.1 million, a 4% increase over the same period in 2013, according to a joint estimate from auto information companies J.D. Power and Associates and LMC Automotive.

“New-vehicle demand in the first half of 2014 has been robust, as evidenced by both strong sales and record transaction prices,” said Thomas King, a J.D. Power vice president. “Looking forward, we expect that strong sales momentum to carry into the second half of the year.”

The sales prices for autos during the first six months of 2014 hit record levels, averaging $29,630. That’s up from $28,880 a year ago. Consumer spending on new vehicles through the first half of the year also reached a record high of $194 billion, a $14-billion increase from the same period in 2013.

Buyers are taking out longer loans and leasing more often.

Loans with term of at least 72 months accounted for 31.8% of purchases during the first half of 2104, up from 30.2% in 2013, J.D. Power reported. The numbers don’t include sales to government agencies, rental car fleets and commercial customers.

Consumers are now using leases for 26% of their purchases, compared with 23.8% for the first half of 2013.

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