The factors boosting sales have longevity, which points to a solid second half for the U.S. auto sector
DETROIT—Three years ago, U.S. car buyers started trickling back into showrooms after largely sitting out the recession. That trickle has turned into a flood.
From owners of revitalized small businesses that need to replace aging pickups to new hires who need a fresh set of wheels for the daily commute, increasingly confident buyers pushed auto sales back to pre-recession levels in the first six months of this year. Sales in the January-June period topped 7.8 million, their best first half since 2007, according to Autodata Corp. and Ward’s AutoInfoBank. Automakers reported June sales rose nine per cent to 1.4 million.
The outlook for the rest of 2013 is just as strong. The factors boosting sales—low interest rates, wider credit availability, rising home construction and hot new vehicles—will be around for a while, and experts are hard-pressed for answers when asked what could slow things down.
“It all points to continuing improvement in the auto market,” said Mustafa Mohatarem, General Motors’ chief economist.
Analysts expect total sales of around 15.5 million cars and trucks in 2013, which would be 1 million more than in 2012. New cars and trucks sold at an annualized rate of 15.96 million in June, the fastest monthly pace since December 2007. From January to May, the pace averaged 15.2 million, according to Jessica Caldwell, a senior analyst at car buying site Edmunds.com.
Demand for big pickups has been the driving force. GM, Ford and Chrysler sold 157,480 full-size pickup trucks combined in June. That is up around 25 per cent from the same month a year ago and almost double the number the companies sold in June 2009, a year when total sales sank to a 30-year low. GM said its new Chevrolet Silverado and GMC Sierra, which went on sale last month, are spending just 10 days on dealer lots before being sold. A 60-day stay is typical.
The pickup boom helps everyone, but especially the Detroit automakers, which sell the vast majority of trucks. And prices are rising as automakers add fancier features. Pickup trucks sold for an average $40,361 in June, up 2 per cent from last year, according to Kelley Blue Book.
But trucks weren’t the only thing driving sales. Small and subcompact cars sales were also strong, possibly because young graduates went shopping for a new car, said Kelley Blue Book analyst Alec Gutierrez. Relatively high gas prices also may have steered some buyers to more fuel-efficient models, he said. Gas averaged $3.60 a gallon nationwide in June, or 10 cents more than a year ago.
Sales of Ford’s recently updated Fiesta subcompact more than doubled, while the Hyundai Elantra small car saw a 22-per cent gain.
Family-haulers also did well to start the summer road trip season. Honda said sales of its Odyssey minivan jumped 26 per cent. The Toyota RAV4 SUV was up 36 per cent, while sales of the Jeep Grand Cherokee SUV rose 33 per cent.
Auto executives said Tuesday that they’re not too concerned about loan rates, because there are so many other positive factors encouraging buyers. Ford’s U.S. sales chief, Ken Czubay, pointed out that there are still four million pickups on the road that are 12 years old or older and will likely need to be replaced soon.
Here are results posted Tuesday by major automakers: