U.S. auto sales, a fundamental measure of consumer confidence, rose 22% in June — led by a rebounding Toyota Motor Corp. Toyota posted a 60% gain over last June when it was beset with post-earthquake and tsunami dislocation.
June results came in stronger than expected by analysts, who just two weeks ago were predicting a second straight month of less-than-stellar sales. Some Wall Street analysts cut back their 2012 forecasts based on the apparent slowdown from the year’s pace through April. “Despite the relative slowdown in the last two months, the auto industry continues to experience improved profitability with strong year-over-year sales, historically high transaction prices and precise incentives spending,” said Jesse Toprak, Vice President of Market Intelligence for TrueCar.com.
Jessica Caldwell, an analyst for automotive website Edmunds.com, speculated that an end-of month sales push by manufacturers increased raised the seasonally adjust annual rate to just over 14 million units. After a sub 14-million rate in May, automakers were eager to maintain the industry’s sales momentum — especially because the end of June also marked the end of the second fiscal quarter, she said. A year ago June’s sales rate was 11.8 million.
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A comparison of transaction prices for new vehicles shows that consumers are spending about $900 more per vehicle this year than they were a year ago, according to TrueCar. The average transaction price in June was $30,508, up from $29,659 a year earlier. Volkswagen had the highest average transaction price on new vehicles sold last month at $33,368 and Kia/Hyundai the lowest at $22,121.
Toyota’s (TM) two best-selling sedans, the midsize Camry and the compact Corolla, accounted for a disproportionate segment of the automaker’s improvement. Camry sales were up more than 50% and Corolla more than 40%.
Honda (HMC) sales rose nearly 50% as well signifying that two of the big Japanese makers are on track to regain lost market share in the U.S., while General Motors Co. (GM) and Ford Motor Co. (F) fight to hang on to share. GM’s share this year is 18.1%, compared with 19.9% at the midpoint of last year; Ford’s share is 15.7%, down from 15.9%.
Chrysler, based in Auburn Hills, Michigan and 62% owned by Italian automaker Fiat SpA, raised its share of the U.S. market at mid year to 11.2% from 10% a year ago.
The increase in passenger car sales outpaced the increased sales of pickup trucks, sport utilities and minivans, as consumers took advantage of better-mileage in newer, smaller, lighter models like the Chevrolet Cruze, Ford Focus, Hyundai Elantra and Dodge Dart, in its first month at dealerships.
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The steadily strengthening U.S. auto sales contradict other key indicators, such as the The Conference Board’s Consumer Confidence Index, which declined in June for the fourth month in a row. As vehicles get older, consumers can only delay purchases for so long until the expense of keeping clunkers in running order outstrips the cost of replacement.
Edmunds.com’s Caldwell said the average age of a vehicle traded in June was about six years, high in historical terms.
If housing prices gain strength in the coming months spending on cars could improve further since consumers will feel better about their financial standing – and construction hiring might pick up, meaning more sales of pickup trucks.
An uptick in housing is a slender reed on which to attach hopes for a strengthening auto industry – but the automakers will take what they can get.
