Auto sales in U.S. down 10.8% in June from May
The recovery of the auto industry may be heading for a detour.
Sales in the U.S. fell 10.8% in June from May, falling below the expectations of several automakers and many industry analysts.
“We just don’t see a lot of people going to purchase cars unless there is some big incentive or deal,” said Jessica Caldwell, an analyst at auto information company Edmunds.com. “Most people’s personal finances have not improved over the past year, so they are gun-shy about purchasing a car.”
Jeff Schuster, global forecaster at J.D. Power & Associates, said consumers appeared beaten down by volatility in the stock market, downbeat economic reports and the slow pace of job creation, creating challenges for an auto industry trying to recover from one of its worst periods ever last year.
“With the recovery not progressing as expected, it’s gut-check time for the automotive industry,” Schuster said. “The industry’s discipline will be put to the test even more in the coming months if a more pronounced recovery doesn’t get underway.”
Autodata Corp., which tracks sales statistics, said the annual selling pace barely topped 11 million. Most automakers and analysts have been projecting that the industry will sell 11.5 million to 12 million vehicles this year.
Although the numbers came in lower than what many expected, Brett Hoselton, an analyst with KeyBanc Capital Markets, said there were still prospects for resurging growth in the second half of the year.
The industry sold 983,738 vehicles last month, fewer than many were predicting but up 14.4% from the recession-depressed levels of June 2009.
Hoselton said there was still room for automakers to increase incentives, which “remain relatively low.” Easier credit and little risk of another large automaker bankruptcy also should make for a more positive selling environment in the second half of the year.
But some analysts said that automakers had learned to operate profitably at historically low levels of sales, and now there was a risk that they could resort to offering costly incentives to lure customers into showrooms and kill off the financial gains they had made coming out of the downturn.
“The risk is that we have hit a bit of a roadblock here — does that send the manufacturers back into some of the bad habits they shed during the recession if this stall were to progress?” Schuster said.
General Motors Co. said its sales rose 36% in June compared with a year earlier, after factoring out the Pontiac, Hummer, Saturn and Saab brands it closed or sold as part of its bankruptcy reorganization last summer.
Its sales, however, were down 12.4% from May because of a decline in fleet sales and the general reluctance of consumers to make a large, debt-inducing purchase.
Total combined sales for GM’s remaining brands — Chevrolet, Buick, GMC and Cadillac — hit 194,828 vehicles for the month, the automaker said. Including the discontinued brands, sales rose 11.9% to 194,716, according to Autodata Corp.
Ford Motor Co. sales rose 13.4% to 175,690 new vehicles from June of last year, Autodata said. But Ford’s sales were down about 11% from May, after factoring out Volvo, which it sold to Zhejiang Geely Holding Co. of China this year.
Chrysler Group said its sales rose 35.4% from a year earlier to 92,482 vehicles, but it posted a 12% sales drop from May.
The automaker described June as “softer than expected” for the industry.
Toyota Motor Corp. continues to lag. The automaker has been hindered by recalls of millions of vehicles and this year was fined a record $16.4 million by the U.S. for failing to promptly recall models that had a sticky gas pedal.
On Thursday, Toyota said it was investigating a valve spring problem in the engines of several previous-model-year Lexus vehicles that could cause the autos to stall. Toyota said it was working on a repair, although it did not announce a recall for the problem.
About 137,000 vehicles are potentially affected in the U.S., including the IS 350, GS 350, GS 460, GS 450h, LS 460 and LS 600hL. Vehicles in the current model year are not affected, the automaker said.
Toyota sales rose 6.8% in June to 140,604 vehicles compared with a year earlier and were off 13.6% from May.
Jim Lentz, president of Toyota Motor Sales USA Inc., said “the entire automotive industry struggled in June as weakening consumer confidence weighed on sales.”
The automaker also noted a difference in regional markets. Sales in the Northeast and Midwest were fairly robust, said Bob Carter, Toyota’s general manager. However, West Coast sales were flat, and sales fell from a year earlier in the Gulf Coast region of Texas to Florida.
Honda sales also were slow. American Honda Motor Co. said June sales rose 6.2% to 106,627 vehicles compared with a year earlier.
Ford, Chrysler and GM reported strong sales of full-size pickup trucks, which GM characterized as a leading indicator of budding recovery in the housing and construction trades.
Auto sales have risen 16.7% through the first half of the year compared with the same period a year earlier. But without a robust second half, sales could reach just 11 million for the year, well below the 11.5 million to 12 million the automakers and analysts who follow the industry had predicted at the start of the year.
Ford had among the most robust first-half gains, growing 26.9% to 981,352, its fastest rate of growth since 1984. Ford’s U.S. market share stood at 17.5% for the first six months of 2010 compared with 16.1% in the same period a year earlier, Autodata said.
Sales of the four surviving GM brands rose 32.6% to 1,066,657, according to Autodata. GM’s market share fell to 19.2% from 19.6% the first half of last year.
Of the major automakers, Toyota posted the smallest gains. Its overall sales, including the Lexus and Scion brands, rose 9.9% to 846,542. Its market share has fallen to 15.1% from 16.0% in the first half of 2009.
