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4% Increase Expected for June Auto Sales

From Bloomberg News

U.S. car and light-truck sales are estimated to rise 4% for June as consumer confidence hit its highest level in more than three decades and General Motors Corp. offered discounts to bolster its market share.

June sales at GM, the world’s largest auto maker, are predicted to rise 0.6%, based on the average of four analysts’ forecasts. DaimlerChrysler sales are forecast to rise about 0.1% from June 1998, and Ford Motor Co. sales are forecast to rise 2.1%.

The industry maintained its march toward a record year, with cars and trucks estimated to have sold at an estimated annualized rate of 17.4 million in June. The rate has so far stayed above 16 million since February, making for its longest streak ever.

New products are especially in demand, with waiting lists for Honda Motor Co.'s Odyssey minivan, Audi’s TT Coupe and Toyota Motor Corp.'s Tundra truck.

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“The product is the strongest I’ve seen in a long time, and every customer seems to have their eye on a specific model,” said Ken Hunt, general manager of Longo Toyota in El Monte. Customers bought most of his first shipment of 30 Tundra trucks before they arrived on his lot earlier this month, the dealer said.

The sales comparisons are to an exceptionally strong June 1998, then the strongest month in 11 years, in which sales hit an annualized rate of 16.7 million. GM discounts were one reason for the strong sales figures.

DaimlerChrysler and major Japanese auto makers are scheduled to report June sales on Thursday, and Ford and GM on Friday.

Toyota is expected to lead the Japanese auto makers with a 19% gain, according to an estimate by Luckey Consulting Group, which tracks auto sales.

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Rising auto sales are evidence that Americans are still on a spending spree based on plentiful jobs, a stock market near all-time highs and rising incomes.

The Conference Board’s index of consumer confidence rose to 138.4 in June, for its eighth straight monthly gain and its highest reading since October 1968.

Even an interest rate boost by Federal Reserve policymakers today would probably do little to slow sales, analysts said. Investors expect the Fed’s Open Market Committee to raise the overnight bank lending rate a quarter of a percentage point to 5% to control inflation.

“Any interest rate hikes are more likely to be fine-tuning that maintains stable growth, rather than a draconian series of rate hikes that sink the ship,” said Gary Lapidus, a Sanford C. Bernstein & Co. analyst.

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