Chrysler, Nissan, GM and Toyota see gains in June

U.S. auto industry sales better than expected

 Jeep 
Jeep was one of June's biggest winners, with sales up 28 percent over last year. 

Chrysler Group and Nissan Motor Corp. were joined by Toyota Motor Corp. and General Motors in posting higher June sales today, signaling the U.S. auto industry fared better in the month than initial forecasts indicated.

Most analysts expected June demand to taper off after the industry's strong showing in May, but results released today indicate the industry will end the first half of 2014 on an upswing after a sluggish start to the year.

GM, rocked by a recall crisis for months, said June deliveries rose 1 percent, with retail deliveries advancing 1 percent and fleet volume up 2 percent. It was the fourth consecutive monthly gain for GM and another sign the automaker is weathering the recall of 25.7 million vehicles in the United States so far this year.

Sales rose 11 percent at GMC and 18 percent at Buick while volume was flat at Cadillac and slipped 3 percent atChevrolet .

GM said its car volume slid 10 percent, crossover shipments edged up 3 percent and truck and SUV deliveries jumped 13 percent in June.

“June was the third very strong month in a row for GM, with every brand up on a selling-day adjusted basis,” Kurt McNeil, GM's vice president for U.S. sales operations, said in a statement. “Our commercial and small business customers are expecting a strong second half of the year, and they are building their fleets to meet demand.”

Across the industry, June sales were helped by “a combination of strong retail sales in the last week of the month and fleet deliveries,” Wells Fargo analyst David Lim wrote in a report today.

Nissan brand rolls on

At Toyota Motor Sales, combined Toyota, Scion and Lexus volume increased 3 percent to 201,714 units last month.

“Sales in the first half of 2014 indicate a steadily recovering industry, and we expect this pace to increase as we move into the second part of the year,” Bill Fay, Toyota division group vice president and general manager, said in a statement previewing the company's results. “In June, Camry and Corolla posted double-digit gains as passenger cars showed renewed strength industry-wide.”

Nissan Group of North America reported sales advanced 5 percent to 109,643 units last month. Nissan Division volume advanced 6 percent; June was the division's 15th record month out of the last 16. However, Infiniti deliveries fell 6 percent.

American Honda's deliveries drop 6 percent to 129,023 in June -- its fourth decline out of the last six months. Sales at the Honda brand fell 4 percent on a 13-percent decline in light-truck deliveries while Acura volume dropped 19 percent.

“Despite an easing of the pace in June, the larger sales trend throughout the industry remains robust,” said Jeff Conrad, Honda division senior vice president and general manager.

At Ford, volume slipped 6 percent on a 6-percent decline at the Ford division and 3 percent drop in Lincoln volume. Ford said its retail sales dropped 5 percent and fleet shipments declined 7 percent. The company's U.S. deliveries have now dropped in four of the last six months.

Mazda reported its best June sales in 10 years with volume up 17 percent to 26,208 vehicles. The gains were driven by its core models, with CX-5 compact crossover sales growing 16 percent to 7,943 units, Mazda6 midsize sedan volume up 25 percent to 4,793 units and its top-selling Mazda3 compact up 17 percent to 8,824 units.

Through June, Mazda sales have climbed 8 percent to 156,431 vehicles.

Subaru's sales streak continued last month with volume up 5 percent to 41,367 units -- its best June ever, though it was the brand's smallest gain on a percentage basis since volume slipped 15 percent in Nov. 2011.

Chrysler streak hits 51

Strong demand for the Jeep line and other trucks helped Chrysler Group to its 51st consecutive monthly U.S. sales gain in June. Chrysler Group's June sales rose 9 percent, with Jeep volume climbing 28 percent and Ram brand volume up 14 percent.

Sales rose 11 percent at Fiat and 1 percent at Dodge, but volume slipped 12 percent at the Chrysler brand, the company said.

Overall, Chrysler Group's light-truck deliveries rose 22 percent while car volume, a weak spot for the company in recent months, slipped 19 percent. Dodge Durango volume rose 9 percent and Chrysler Group's minivan deliveries rose by more than 20 percent in June.

Ram pickup sales climbed 12 percent in June to 33,149 units, helped by incentives, according to several analysts. It was the best June for Ram pickup volume in 10 years, Chrysler said.

Chrysler is already offering July 4 holiday deals as high as $7,500 on the 2014 Ram 1500 pickup, NADA Used Car Guide said today.

Chrysler Group's overall sales have climbed 12 percent year-to-date, with Jeep volume up 45 percent, largely on demand for the new Cherokee.

At Kia, June sales edged up to 50,644 units.

In a Tweet, Hyundai said its deliveries rose 4 percent to 67,407 units in June, with Sonata volume hitting a monthly record of 23,672.

The Volkswagen brand's U.S. sales slump continued with volume falling 22 percent to 28,827 units.

“With the launch of the ... 2015 Golf GTI, as well as the upcoming introduction of the all-new 2015 Golf TSI and even more fuel efficient diesel engines, we are confident Volkswagen will be back on the shopping list for more customers,” Mark McNabb, Volkswagen of America's COO, said in a statement.

Among other VW Group brands, Porsche set a June sales record with volume of 4,101, up 11 percent, and Audi reported sales of 16,867, a 23 percent improvement and the luxury brand's 42nd straight month of record sales.

Unit forecast

U.S. light-vehicle sales are forecast to dip 2.6 percent to 1.37 million in June, based on the average of 10 analyst estimates compiled by Bloomberg.

“Sales may have been pulled ahead into May due to a strong Memorial Day weekend and also due to due to the fact that there were five weekends in the month [of May],” Barclays analyst Brian Johnson said in a report last week. “It is unclear that the June SAAR factors are adjusted appropriately for 'payback.'“

In June 2013, industry sales also benefited from one additional weekend of selling, some analysts said.

The annualized sales rate for June is projected to hit 16.3 million, according to Bloomberg's survey of 14 analysts, up from 15.9 million a year earlier but down from May's 16.8 million rate.

But Chrysler today estimated the June SAAR will come in at 17 million, including medium and heavy trucks. GM today pegged the June SAAR at 16.6 million.

If the SAAR projections hold up, it will mark the fourth consecutive month the annualized sales rate has topped 16 million.

Sales at GM, Ford, Toyota, Honda, and Hyundai-Kia were projected to decline in June, while analysts projected gains for Nissan and Chrysler.

Chrysler and Nissan have driven more than half of the industry's sales growth this year through May, Kelley Blue Book says.

Ideal environment

After a weak start to the year because of severe winter weather, healthy economic fundamentals -- notably low interest rates, a favorable credit environment and rising employment -- have fueled the 5-percent gain in U.S. light-vehicle sales gains through May.

"The economy has remained steady despite a lot of uncertainty overseas," said Ron Stettner, vice president of sales for Mazda North America.

Most analysts believe the U.S. auto industry remains on track to top the 16-million sales mark this year for the first time since 2007.

LMC Automotive, citing May sales results and June's expected sales pace, last week hiked its U.S. light-vehicle retail sales forecast for 2014 to 13.4 million units from 13.3 million, and its total light-vehicle forecast for the year to 16.2 million units from 16.1 million.

LMC also cited a 55 percent increase in new-model activity in 2014 compared to 2013. Nearly every vehicle segment is benefiting from fresh models, LMC said, noting especially the raft of new small crossovers and small premium cars that have hit showrooms in recent months.

“The U.S. auto market is arguably in the best position and health it has been in since well before the great recession,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Sales are robust and stabilizing above a 16-million-unit pace and are back in balance with production levels, keeping inventory in check. While GDP growth remains below ideal levels, the auto market continues to be instrumental in helping drive the economy.”

The average U.S. transaction price for light vehicles was $30,575 in June, down $245, or off 0.8 percent, from June 2013, and down $689, or off 2.2 percent, from May 2014, TrueCar Inc. said today.

“We're encouraged to see continued strength in retail sales while transaction prices and incentives have remained steady,” John Krafcik, president of TrueCar, said in a statement. “And despite PR challenges, among full-line automakers GM now owns the highest transaction prices in the industry at nearly $35,000 -- a tribute to the strength of their new models and incentive spending discipline.”

'Silent price war'

Still, some analysts are warning of a rising disconnect between average transaction prices, which remain strong, and what is happening in new-car showrooms.

In a report last week, Morgan Stanley analyst Adam Jonas said the annualized rate of sales is becoming “compromised,” most notably by extended loan terms, in what he called “the silent U.S. price war.”

Jonas said some dealers are approving new-car deals that lower monthly payments in return for extended loan terms as high as 7 years and a modestly higher interest rate that drive final transaction prices higher.

“At the end of the month the published data shows higher sales and higher ATPs, giving the image of improved mix when precisely the opposite is occurring,” Jonas said. “More attention should be paid to the risk of customers being taken out of their normal trade cycle, creating a vacuum.”