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Auto sales in the U.S. grew 9.2% to 1.40 million units in Jun, translating into a 13.2% year-over-year rise to a seasonally adjusted annual rate (SAAR) of 15.96 million units, the fastest since Dec 2007. The increase was largely attributable to a growing popularity of pickups among buyers amidst improvements in housing, construction and energy sectors.
This apart, strong pent-up demand, plethora of new models, lower interest on auto loans and a resilient economy leading to higher consumer confidence contributed to the big push.
The pickup boom was evident. Detroit’s Big Three, General Motors Company (GM - Analyst Report), Ford Motor Company (F - Analyst Report) and Chrysler, sold 157,480 full-size pickup trucks during the month, up 25% from Jun last year. As a result, average prices of pickups went up 2% year-over-year to $40,361 in Jun, as Kelley Blue Book has revealed.
No doubt, there would be a strong pent up demand, as average age of vehicles on U.S. roads is more then 11 years now. Its worth to mention that interest on auto loans was at near historic low in June. According to Bankrate.com, the average rate on a four-year car loan is 2.7%. The low rate is sustainable for a near term, as Fed Chairman Ben Bernanke has pledged to maintain short-term interest rates at record lows until the unemployment rate reaches 6.5%.
Let us take a look how the major automakers have performed during the month.
Detroit Big Three
Among these three major players, Ford posted the biggest gain in sales. The automaker recorded a 13.4% rise in sales to 235,643 vehicles, driven mainly by strong demand for its pickups and small cars. F-Series continued to be its most popular pickup while Ford Fiesta and Focus small cars were consumers’ favorites during the month.
GM posted a 6.5% increase in sales to 264,843 vehicles, making June its best month since Sep 2008. The company’s Chevrolet brand was the big gainer (especially Cruze) while Silverado pickup was its top-selling vehicle.
Chrysler Group – controlled by Italy’s Fiat SpA – recorded an 8.2% rise in sales to 156,686 vehicles, making its best June since 2007. Ram full-size pickup with a 24% gain and Jeep Grand Cherokee SUV with a 33% rise were the biggest gainers during the month.
Japanese Big Three
Toyota Motor Corp. (TM - Analyst Report) posted a 14% rise in sales to 195,235 units due to a strong demand for its Camry sedan, Prius hybrid and the newly redesigned Avalon sedan. These three models recorded nearly fourfold increase in sales in Jun.
Honda Motor Co. (HMC - Analyst Report) reported a 9.7% rise in sales to 136,915 vehicles. The rise was attributable to strong sales of its Accord and Civic sedans as well as some SUVs.
Nissan Motor Co. (NSANY) posted a 12.9% increase in sales to 92,237 units, it’s best-ever June sales. Thanks to double-digit gains in Altima and Sentra sedans and fourfold increase in Leaf electric car sales after a price reduction earlier this spring
Other Big Automakers
Among the other major automakers, Germany’s Volkswagen AG (VLKAY) and Korea’s Hyundai Motor succumbed to intense competition in the industry. Volkswagen posted a 3.2% decline in sales to 36,957 units while Hyundai saw a marginal 1.9% rise in sales to 65,007 units in Jun.
Strong pent-up demand, easier car finance and improving macroeconomic conditions will continue to act as a catalyst to rejuvenate U.S. auto sales to the pre-recession level. According to Autodata Corp., sales in the first half of the year were the best since 2007 at 7.8 million vehicles. Full-year sales are expected to be around mid-15 million on a SAAR basis, compared with 14.5 million units in 2012.