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Light vehicle sales in the U.S. during June showed a marked recovery, approaching pre-recession levels amid a weak labor market and dipping consumer confidence.
According to Autodata Corp., seasonally adjusted annual rate (SAAR) during the month was 14.1 million vehicles, which is up 22% from 11.6 million vehicles in June last year and close to 16.1 million vehicles in 2007, before the economy was hit by recession. With this, the auto industry also completed the best first half of the year since 2008.
The key factors that drove auto sales during the month include lower gas prices, low interest rates and, above all, strong pent-up demand. Merchandising promotions (such as zero-interest loans) and price incentives ahead of Independence Day also enticed consumers to buy new vehicles.
Most of the major automakers posted double-digit rise in sales. Let us take a look at each of them one by one.
General Motors Company (GM - Analyst Report) posted a 16% rise in sales to 248,750 units of cars and trucks, which is the company’s highest monthly total since September 2008. The company’s sales were mainly fueled by small cars such as Chevrolet Volt (more than tripled to 1,700 units over June 2011) and midsize cars such as Chevrolet Malibu and Buick LaCrosse (double-digit rise).
Ford Motor Co. (F - Analyst Report) reported a 7% increase in sales to 207,759 vehicles, mainly driven by higher demand for utilities. Ford Escape crossover established a monthly record with a 28% growth in sales to 28,500 units. Other models that did well during the month include Explorer (up 34.5%), Fusion (up 17.4%) and F-Series (up 10.9%).
Chrysler Group LLC – controlled by Italy’s Fiat SpA (FIATY) – saw its best June in five years with sales of 144,811 vehicles, up 20% from last year. Sales of both the small Fiat 500 and Chrysler 300 large sedan more than doubled from the year-ago levels during the month.
Toyota Motor Corp. reported a sharp 60% rise in sales to 177,795 vehicles. The remarkable increase in sales can be attributable to the weaker comparable month last year on the back of disruptions in supply of vehicles following the earthquake and tsunami in Japan, as well as severe flooding in Thailand in the second half of the year. Camry continued to be the best-selling vehicle of the company with a 50% rise in sales to 32,107 units.
Honda Motor Co. (HMC - Analyst Report) sales shot up 48.8% to 124,808 vehicles, driven by strong sales of Accord (up 84.1%) and Civic (up 57.3%) sedans. Sales of Honda cars and trucks spiked 45.6% to 109,438 units, while Acura division sales surged 76.5% to 15,370 units.
Nissan Motors Co. (NSANY) recorded a 28.2% rise in sales to 92,237 vehicles, mainly driven by strong sales of trucks and sports utility vehicles (SUVs). The automaker sold 55,636 cars and 36,601 trucks during the month, up 19.1% and 45.2%, respectively, from the year-ago levels. Some of the popular vehicles sold by Nissan during the month include Rogue (up 46.8%), Juke (up 52.7%) and Altima (up 11.7%).
Daimler AG’s (DDAIF) Mercedes-Benz sales scaled up 7.6% to 22,231 units driven by strong sales of a new M-Class SUV and a new C- Class coupe. The company’s sales are likely to increase further with the introduction of a new GL three-row SUV and an updated GLK compact SUV.
Volkswagen AG (VLKAY) sales grew 34.2% to 38,170 vehicles, making the namesake brand’s best June ever. The automaker sold 10,252 units of redesigned Passat sedans during the month and sold 2,914 units of Beetle coupes.
Hyundai Motor Co. sales grew 7.8% to 63,813 vehicles. Sales of Sonata cars went up 12.3% to 20,931 units, while that of Elantra declined 11.7% to 17,655 units.
Strong pent-up demand and improving macroeconomic conditions in the U.S. will continue to revive the industry from recessionary lows, partially offset by the backlash from the economic crisis in Europe. Average vehicle age of vehicles on the U.S. road is 10.8 years. The replacement rate is expected to remain solid until 2013.
The good news is that a revival of the automotive industry will lead to a recovery in other industries as well, since the former generates demand for many products that are used in manufacturing the automotive components.