There may be plenty of reasons to worry about the U.S. economy: Weak jobs numbers, poor housing starts and a European economic crisis that threatens to spill across the Atlantic. But based on June sales numbers, the American auto industry is not one of them.
Car sales outpaced even the more optimistic forecasts, with several manufacturers setting all-time records. A number of others, notably General Motors, saw demand surge to levels not seen since before the start of the lingering U.S. recession.
Significantly, while the industry was clearly pushing hard to sell, sell, sell, industry data suggest automakers didn’t fall into the past trap of buying sales with hefty rebates and other incentives.
“The combination of new products, available credit, lower fuel prices and modest economic growth was a stronger influence on consumer behavior than economic and political uncertainty,” said Kurt McNeil, General Motors’ vice president of U.S. sales.
GM posted a solid, 16 percent year-over-year gain, June bringing the maker’s best monthly unit sales since September of 2008.
Chrysler, meanwhile, delivered its 27th consecutive monthly year-over-year increase — an increase of 20 percent — making it Chrysler’s best June in five years.
Honda had to look back to 2008 for the last time it did so well in June, a month normally buoyed by the so-called Spring buying season. Overall, the Japanese maker gained 48.8 percent, but its struggling luxury division, Acura, gained 76.5 percent — helped by the addition of some critical new products like the entry-luxury ILX. The mainstream Honda division did well, with a 45.6 percent increase despite the fact that its Accord sedan is months away from being replaced by an all-new model.
The Japanese did well across the board, Nissan reporting a 28.2 percent jump — its own luxury arm, Infiniti, gaining 66.1 percent for the month.
But the real winner was industry giant Toyota. Like its Japanese rivals it suffered severely in spring 2011 as it was forced to close or sharply cut back production at many of its key assembly plants due to the March earthquake and tsunami that devastated Northeast Japan. For June 2012, it saw sales rocket upwards by 60.3 percent — and forecast still better days to come.
“June and first-half sales were driven by consumer interest in our new models including the Prius C … and the Camry,” which was redesigned for the 2012 model-year, noted Toyota division group vice president Bob Carter. “We expect to see continued stability in the automotive market during the second half of 2012,” added Carter, thanks to pent-up demand, low interest rates and a continued influx of new products.”
Toyota recently increased its forecast for the full year to 14.5 million vehicles, a figure more and more analysts now agree with. In fact, June’s Seasonally Adjusted Annual Sales Rate, or SAAR, came in at more than 14 million, up from 13.7 million in May.
And it did that even though the industry cut back on incentives by 1.6 percent from May to June, to an average $2,187 per vehicle, according to a preliminary estimate by tracking firm Edmunds.com. That was also down 0.8 percent from June 2011.
Nonetheless, there are some skeptics who worry that a weak economic recovery and the threat of a worsening crisis in Europe could cause the car market to stutter — or force makers to ramp up spending on givebacks.
“There was great pressure from automakers to close June strong, especially after the unexpectedly weak Memorial Day holiday weekend in May,” noted Jessica Caldwell, Edmunds’ chief analyst. “It is the end of a quarter so undoubtedly they wanted to finish big. Two weak months in a quarter would make for unfavorable reporting.”
If anything, the industry may be suffering from too quick a recovery. Ford Motor Co. sales rose by a relatively modest 7 percent, but the maker has repeatedly warned that the cuts it made during the recession now leave it with a shortage of capacity. Hyundai has issued a similar warning and said it is struggling to break bottlenecks both at its U.S. plant and on assembly plants in Korea.
There were a few weak players in June, notably Jaguar which has been struggling to build demand for its flagship XJ resulting from reports of early quality problems (the big sedan getting a clean bill of health in the latest J.D. Power Initial Quality Survey released last month).
Luckily for the Indian-owned carmaker its British sibling Land Rover has scored a big hit with its first-ever crossover vehicle, the Range Rover Evoque. Overall Jaguar Land Rover sales were up a combined 2 percent.
A surprisingly weak performance came from BMW, up only 0.4 percent for the month, though its Mini subsidiary gained 14.7 percent — the combined brands collectively picking up 3.2 percent for June.
Meanwhile, Mercedes-Benz not only set a June sales record but had its highest-ever U.S. sales for the first half of the year. Porsche picked up 17.9 percent, the brand scoring with new versions of the flagship 911 sedan and smaller Boxster roadster.
Volkswagen gained 34.5 percent, steadily gaining momentum with its midsize Passat which was designed specifically for the U.S. market and which is being built at the German maker’s new assembly plant in Chattanooga.
VW sales are running at their highest levels since the golden days of the original Beetle. But the maker is targeting a goal of 600,000 vehicles annually before decade’s end, which would require it to double again its current sales.
So, like the rest of the industry, the maker is keeping corporate fingers crossed that June’s sales surge wasn’t just a short-term phenomenon.
via Bottom Line.