Traverse City Record-Eagle

Michigan

Related Photos

  • 2011 Chrysler 200 vehicles are seen on the assembly line at the Sterling Heights Assembly Plant. Associated Press file photo

    CSSE568.jpg
July 2, 2011

U.S. auto sales up

THE ASSOCIATED PRESS Associated Press

DETROIT (AP) — Gas prices hit a sweet spot for automakers last month. They fell far enough to spur pickup truck sales, yet remained so high that small cars sold well, sometimes just hours after reaching dealers' lots.

That made June a good month for General Motors and Ford, which have traditionally relied on truck sales and now have strong lineups of smaller, fuel-efficient models as well.

Toyota and Honda couldn't take advantage, however. Their sales plummeted more than 20 percent each as they ran short of cars because of the ongoing problems from the March earthquake in Japan.

Those declines — and the continuing weakness in the U.S. economy — meant sales grew more slowly in June than they might have. U.S. sales rose 7 percent to 1.05 million. Analysts had expected a double-digit gain.

Sales aren't expected to pick back up until fall, when Japanese production is at full capacity.

"Some consumers have decided to sit on their hands and delay their purchases," said Don Johnson, GM's vice president of U.S. sales.

General Motors Co. and Ford Motor Co. both said their sales rose 10 percent. And the Chevrolet Cruze small car vaulted past perennial best-sellers like the Toyota Camry and the Honda Civic to become the best-selling car in America. Chrysler Group's sales increased 30 percent thanks to popular new products like the Jeep Grand Cherokee and Chrysler 200 sedan.

Gas prices averaged $3.68 per gallon in June, cheaper than in May but hardly inexpensive. It was enough to change some buyers' behaviors.

"There is a certain portion of consumers that react to gas prices almost on a daily basis, and they decide what to buy based on those prices," said Jesse Toprak, vice president of industry trends and insights for car pricing site TrueCar.com.

The drop in gas prices lured more pickup truck buyers. Chrysler reported a 35-percent increase in Ram truck sales, while Chevrolet Silverado sales rose 5 percent. Any jump in pickup sales helps the Detroit automakers, which sell more than five times as many pickups as foreign-based brands. But even Nissan Motor Co. benefited. Sales of its Frontier small pickup rose 51 percent.

Ford said even pickup buyers had their eye on gas prices. More than half of F-150 buyers chose smaller V-6 engines over V-8s. It was the first time smaller engines outsold larger ones since the 1980s.

Small cars also remained hot sellers. Sales of the Cruze more than doubled those of the car it replaced, the Chevrolet Cobalt, while sales of the Ford Fiesta subcompact were up 438 percent from last June.

But automakers could have sold more small cars without the supply disruptions in Japan. Sales of the Toyota Prius hybrid fell 61 percent to 4,340, their lowest level in seven years, according to TrueCar.com, while Honda Civic sales were down 35 percent. U.S. automakers sold as many small cars as they could make, but they couldn't meet the demand for small cars alone.

The industry began June with a 30-day supply of compact and subcompact cars, and inventory has only gotten tighter, Ford's top U.S. sales analyst George Pipas said. Chevrolet has only 18 days' worth of the subcompact Aveo to sell. Some new Ford Focus small cars sold within hours of arriving at dealerships. A 60-day supply is more typical.

Toyota said it expects to deliver 36,000 Prius hybrids to U.S. dealers this summer and eventually top last year's sales. Don Esmond, Toyota's senior vice president for automotive operations, said the company expects production in Japan to be back to normal levels by the end of this month, while North American production will be back to 100 percent in September.

But concerns about the weak economy are hanging over the industry. Unemployment remains high, incomes are flat and consumer confidence — an important measure of whether or not cars will sell — slipped to a seven-month low in June.

Some analysts are already lowering their expectations for the year. Don Johnson, GM's vice president of U.S. sales, said he now expects total industry sales to be at the low a range of 13 million to 13.5 million vehicles. J.D. Power and Associates lowered its full-year sales forecast slightly to 12.9 million.

"Things aren't quite as healthy in the current environment as expected earlier this year," said Jeff Schuster, J.D. Power's executive director of global forecasting.

The rate of auto sales has slowed considerably since before the Japan earthquake. Automakers began 2011 on track to sell more than 13 million cars and trucks this year. But if sales remain at the pace seen in June, annual sales would instead be 11.5 million. As recently as 2005 annual sales were approaching 17 million.

Still, there are reasons to believe that demand is there. Ford said the average age of a car on the road has risen to a record 11 years, and many of those cars will need to be replaced soon.

Once Honda and Toyota are back in the game, they will also have to offer plenty of deals to win back customers who have been shopping competitors like Hyundai and Nissan, said Jack Nerad, editorial director of Kelley Blue Book. That will help get buyers back into showrooms.

Other automakers reporting Friday:

-- Volkswagen AG said its U.S. sales rose 35 percent on strong demand for its Jetta midsize sedan and other models.

-- Nissan Motor Co. said sales rose 11.4 percent on strong demand for smaller vehicles. Sentra compact car sales rose nearly 31 percent.

-- Hyundai Motor Co. sales were up 15.6 percent, led by the Elantra compact car. The Korean automaker sold 59,209 vehicles in June, up from 51,205.

-- Kia Motors Corp. reported its best June ever with sales up 41 percent to 45,044. The hottest seller was the new Optima midsize sedan at 7,099. That's almost six times more Optimas than were sold a year earlier.

Text Only