Sales up at GM on new models
General Motors Co. surprised investors with a sales gain in June, where analysts projected a decline. Ford Motor Co., Chrysler Group LLC and Nissan Motor Co. beat estimates in the industry's best month since July 2006.
The rate of sales, adjusted for seasonal trends, jumped to 16.98 million, the fastest in almost eight years, according to researcher Autodata Corp. Light vehicle sales in the United States last month rose 1.2 percent to 1.42 million vehicles. That exceeded the average analyst estimates for a 16.3 million rate on 1.37 million sales. GM's sales rose 1 percent, beating the average analysts' estimates for a 6.3 percent decline last month, even as its vehicle recalls rose to a U.S. record.
“General Motors is amazingly resilient,” said Michelle Krebs, a senior analyst at AutoTrader.com. “Consumers recognize that the products GM is offering now aren't the same as the recalled models. If you look at what's selling, it's the new stuff that's doing really well.”
GM, trying to grapple with a recall crisis that erupted in February, faced a difficult June. The company released a report on an internal investigation that found a lack of urgency in the engineering and legal departments led the automaker to take more than a decade to recall flawed 2.59 million Chevy Cobalts and other small cars linked to at least 13 deaths.
Chief Executive Officer Mary Barra returned to Congress last month for additional testimony on the matter and the company continued its stepped-up pace of recalls with the total reaching almost 29 million vehicles in North America. The company's shares rose 3.6 percent to close at $37.59, the highest in almost four months.
While struggling with troubled products dating back more than a decade, GM's newly designed vehicles drove sales last month to a total of 267,461 vehicles. Buick brand sales rose 18 percent, led by deliveries of the new Encore small SUV, for its best June since 2006. Chevrolet Tahoe SUV sales almost doubled while Cadillac Escalade deliveries increased 84 percent and Chevy Suburban rose 73 percent.
The new models are helping GM take advantage of an improving auto market. Aided by available credit and a strengthening economy with housing starts that remained near the 1 million mark in May, U.S. auto sales are headed for the biggest year since 16.15 million vehicles were sold in 2007.
Chrysler's deliveries rose 9.2 percent in June, the company's 51st consecutive monthly increase, while Ford's light-vehicle sales decreased 5.8 percent, less than analysts' projected decline of 6.6 percent. Toyota Motor Corp.'s sales trailed analysts estimates.
For the last two months, industrywide auto sales have been running at an annualized rate of 17 million, including medium and heavy trucks, John Felice, Ford's U.S. sales chief, said today on a call with analysts and reporters.
“It was a really solid run rate the past two months for the industry,” Felice said. “We expect that to continue, especially into the first part of July with the promotional push by the industry” around the Independence Day holiday on July 4.
Chrysler delivered 171,086 cars and light trucks, aided by a Jeep brand sales gain of 28 percent, according to a statement from the company. The third-largest U.S. automaker topped the average of eight analyst estimates for gain of 5.9 percent, helped by a 24 percent increase in sales of the Town & Country and a 22 percent gain by the Grand Caravan, both minivans. Ram pickup sales rose 12 percent to 33,149, the Fiat SpA-owned company said.
“In spite of two fewer selling days in June versus a year ago, we were able to increase our sales 9 percent and post our strongest June sales in seven years,” Reid Bigland, Chrysler's U.S. sales chief, said in the statement.
Nissan sales rose 5.3 percent, topping estimates for a gain of 3 percent. While Altima sales slipped 2.9 percent to 26,111, Sentra sales jumped 68 percent to 17,097 and Versa deliveries rose 33 percent to 11,613.
Ford's light-vehicles sales declined to 221,396 as F-Series pickup and Taurus sedan deliveries fell 11 percent and 30 percent, respectively. Fusion family-car sales rose 14 percent to 27,604. Ford shares slipped 0.2 percent to $17.21.
Chrysler's namesake brand fell 12 percent to 24,026 deliveries. The new 200 family sedan sold more than 5,000 as inventories grew in dealerships, up from 595 in May. The cars are lasting 12 days, on average, on dealer lots, the company said. Including the previous version of the sedan, Chrysler sold 7,345, compared with 12,360 a year earlier.
Toyota sales rose 3.3 percent, just shy of the 3.5 percent average of eight analysts' estimates.
“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,” said Bill Fay, group vice president for the Toyota Division. “In June, Camry and Corolla posted double-digit gains as passenger cars showed renewed strength industrywide.”
Combined sales for Hyundai Motor Co. and Kia Motors Corp. rose 2.2 percent to 118,051 the affiliated companies said in separate releases, topping an expected 2.4 percent decline. Hyundai said in a Twitter post that its sales grew 3.7 percent and Seoul-based Kia reported a 0.2 percent gain in June.
Honda Motor Co. said in an e-mailed statement that sales of Honda and Acura autos fell 5.8 percent, matching average expectations of eight analysts' estimates.
Combined sales for Japanese and Korean automakers in the U.S. rose 2.1 percent to 632,027 last month, with only Tokyo- based Honda reporting a decline.
Bigland said the seasonally adjusted annualized rate may reach as high as 17.1 million by the end of the day, a pace he attributes to an improving economy, availability of affordable credit and pent-up demand from the recession and recovery.
“Frankly the pace surprised me a bit,” Bigland said in an interview. “But it gets back to those underlying drivers of the market. We're getting into these high 16, low 17 million SAARs and I don't see a lot of that changing over the next six months.”
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