U.S. auto sales for June top analysts' estimates

Bloomberg NewsJuly 4, 2012 

SOUTHFIELD, Mich. -- General Motors, Ford and Chrysler on Tuesday reported U.S. auto sales for June that topped analysts' estimates, helping the industry surpass projections and stay on pace for the best year since 2007.

U.S. auto sales may have accelerated to faster than a 14 million seasonally adjusted annualized rate, GM and Chrysler said in emailed statements.

The forecasts top the 13.8 million light-vehicle pace that was the average estimate of 15 analysts surveyed by Bloomberg.

The auto-industry sales provide a bright spot in the U.S. economy that has been hindered by persistent unemployment and weakening consumer confidence.

Analysts under-estimated demand for most automakers' vehicles after May sales came in lower than projected. June sales were bolstered by holiday promotions that drew consumers and by higher sales to fleet customers.

"A lot of analysts -- ourselves included -- were cautious going into June with the unemployment rate inching up, consumer confidence dropping and the volatility going on in Europe," Alec Gutierrez, an analyst at Kelley Blue Book in Irvine, Calif., said in a telephone interview. "It's just a testament to the strength of consumer demand for new vehicles despite all the negative news out there."

GM sales climbed 16 percent last month, beating the 7.6 percent increase that was the average estimate of 11 analysts surveyed by Bloomberg. Deliveries rose 20 percent for Chrysler and 7.1 percent for Ford, topping analysts' average estimates for gains of 18 percent and 3.5 percent, respectively. Nissan Motor Co. sales rose 28 percent, exceeding the 21 percent average estimate.

The U.S. auto industry has zoomed back since 2009 when GM and Chrysler restructured in government-backed bankruptcies, threatening the viability of suppliers and thousands of jobs. Light-vehicle sales this year may reach 14.3 million, the average of 16 analysts' estimates, which would be 38 percent more than the 10.4 million total in 2009.

"There's a little bit of disconnect between what we're seeing in the economy and what we're seeing in the auto industry," Rebecca Lindland, an analyst at IHS Automotive, said in a telephone interview. "For the average consumer in middle America, they don't really care what the euro is doing. If they need a car, they're not thinking whether Greece is going to exit the euro zone from their Chevy dealership."

Toyota and Honda led the industry with June sales gains of 60 percent and 49 percent, respectively. The Japan-based automakers missed eight analysts' average estimate for increases of 66 percent and 51 percent.

GM said the annual selling rate may have topped 14 million light vehicles in June, according to a statement. Chrysler, controlled by Fiat , forecast a 14.4 million industry selling rate, including medium-and heavy-duty trucks, in its statement. Excluding such vehicles usually lowers the rate by about 300,000 units.

The pace may be in the mid-14 million range, including medium- and heavy-duty trucks, Ford said in a conference call. Last month's selling rate for light vehicles was 13.8 million, missing estimates for a 14.4 million pace.

Marketing campaigns tied to the Independence Day holiday helped boost sales in the last week of the month, said Ken Czubay, Ford's U.S. sales chief.

"We definitely saw an improvement in the last seven, eight, nine days," Czubay said Tuesday on a conference call. "It's always been a good time to buy around the Fourth of July. I think ourselves and our competitors came out, causing a good stir in the marketplace." Incentive spending was down slightly from May, he said, adding that new models helped attract buyers.

Ford said sales of the Escape sport-utility vehicle climbed 28 percent to 28,500, while deliveries of the Fusion sedan rose 17 percent to 24,433.

Analysts at Citigroup and Deutsche Bank last month lowered estimates for auto demand in 2013 by 500,000 car and light-truck sales. Citigroup's Itay Michaeli lowered his outlook to 14.5 million sales, from 15 million. Deutsche Bank's Rod Lache cut his estimate to 14.2 million, from 14.7 million.

Analysts "tend to overreact to change in both directions," said Alan Baum, principal of Baum & Associates in West Bloomfield, Michigan, who estimated a 14 million industry sales pace for June. "The overall trends affecting car buyers have been pretty consistent. I just don't see changes in underlying numbers to say 'Oh my, last month was bad, things are just falling apart.'"

Chrysler deliveries climbed to 144,811 cars and light trucks from 120,394 a year earlier. The Auburn Hills, Mich.- based company set records for the Fiat 500 small car and Jeep Wrangler sport-utility vehicle in June. Sales of the 500 more than doubled to 4,004 and sales of the Wrangler surged 28 percent to 14,461.

Deliveries of the Malibu sedan, which GM redesigned earlier this year, increased 32 percent to 31,402. The Detroit-based automaker said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.

"They're likely going to have a relatively high days supply of trucks moving forward and they're already placing some pretty aggressive cash incentives on the hood," Kelley Blue Book's Gutierrez said. "It's going to eat into their profit margins, but if you have to place a $3,000 or $5,000 incentive in their portfolio, you want it to be on full-size pickups, because those have the highest margin overall."

South Korean automakers Hyundai and Kia joined Chrysler in reporting smaller June sales gains than they recorded this year through May. Hyundai and Kia combined to sell 10 percent more vehicles in June than a year earlier, exceeding the 9.8 percent increase that was the average of six analysts' estimates.

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