Auto sales heat up in July
Automakers reported strong July sales as consumers replacing aging cars and businesses buying trucks pushed the industry to levels not seen since before the recession.
All of the top automakers reported double-digit gains over the same month a year ago. Ford Motor Co. and Chrysler Group said it was their best July since 2006.
“If we were ever looking for an indication that the industry is back, this is the month,” said Jessica Caldwell, an analyst with auto information company Edmunds.com. “People are getting back into the buying cycle.”
Analysts said Ford could have sold more cars if it had had a big-enough inventory of hot sellers, such as the Explorer sport utility and Fusion sedan. Some of its inventory crunch should ease when the automaker expands production of the Fusion at a factory in Michigan this year.
Automakers sold more than 1.3 million cars and trucks last month, a 14% jump over the same month a year earlier. They are on track to sell upward of 15.5 million vehicles this year, which would be the best annual sales since the industry moved 16.1 million autos in 2007.
Consumers have pushed the retail segment of the industry — everything but fleet and rental car sales — to an eight-year high, said Brett Hoselton, an analyst with KeyBanc Capital Markets Inc.
At the same time, fleet customers pulled back on their purchases last month. General Motors Co. said its sales to the federal government were down about 90% from a year ago.
Auto sales will experience strong growth as daily rental fleets resume purchases and inventory of popular models is replenished, Hoselton said.
Another part of the increase is the boom in pickup truck sales to the recovering housing and construction industries. Typically, truck sales are heavier late in the calendar year, but they were the fastest-growing segment of the market through the first seven months of this year.
“With the economy continuing its slow and steady recovery and low lease opportunities, rock-bottom interest rates and cash rebates all readily available, all signs point to continued solid growth through the second half of the year,” said Alec Gutierrez, an analyst at car price information company Kelley Blue Book.
That was the read on Wall Street, where auto stocks continued to gain ground Thursday.
Shares of GM rose almost 2% to $36.47. Ford stock also rose almost 2% to $17.19. The price of Toyota’s U.S. shares jumped more than 4% to $126.24.
GM was again the top seller last month, moving 234,071 vehicles in July, a 16.3% gain from the same month a year earlier, according to Autodata Corp. Its truck sales were 51% ahead of last July.
In a turnabout that hasn’t occurred since March 2010, Toyota Motor Corp. narrowly outsold Ford to take second place, according to Autodata.
Toyota’s U.S sales rose 17.3% in July to 193,394 vehicles compared with the same month a year earlier, while Ford sold 193,080 vehicles, an 11.3% increase.
Ford was hampered by its inventory shortage, and Toyota juiced sales by offering large incentives on its Camry, which maintained its ranking as the bestselling passenger car in America, according to Caldwell. Camry incentives were the highest in two years and four times as much as those offered on the rival Honda Accord.
“It came with a price,” Caldwell said. Similarly, Honda barely topped Chrysler to rank as the fourth-biggest seller in the U.S. last month.
Honda sales increased 20.9% to 141,439 vehicles. With sales of more than 32,000, the Civic broke its July sales record set 13 years ago. Chrysler Group, meanwhile, sold 140,102 vehicles, an 11.1% gain from the same month a year earlier.
Nissan’s U.S. sales rose 10.9% to a 109,041 vehicles last month, setting a July record for the Japanese company.
In meetings with dealers this week, Fred Diaz, Nissan’s U.S. sales chief, said he found that “traffic in the stores is robust, consumer sentiment is strong, and shoppers are in the mood to buy.”
One company missing out on the sales parade was Volkswagen, which after gaining ground from the introduction of several models in recent years has seen its momentum slow.
Sales of the VW brand fell 3.3% to 35,799 vehicles compared with the same month a year earlier.
But the overall brisk sales pace of July — and in recent months — has prompted several analysts to increase their sales estimates for all of 2013.
LMC Automotive raised its forecast for light-vehicle sales this year to 15.6 million units from 15.4 million. Kelley Blue Book also raised its estimate to 15.6 million from 15.3 million
“The overall trend in vehicle demand has outshined economic growth,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. Looking forward, he said, the pace could accelerate.
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