Pickups Push Auto Sales to Near 6-Year High - Analyst Blog
July 09 2013 - 6:08PM
Zacks
Auto sales in the U.S. grew 9.2% to 1.40 million units in Jun,
translating into a 13.2% year-over-year rise to a seasonally
adjusted annual rate (SAAR) of 15.96 million units, the fastest
since Dec 2007. The increase was largely attributable to a growing
popularity of pickups among buyers amidst improvements in housing,
construction and energy sectors.
This apart, strong pent-up demand, plethora of new models, lower
interest on auto loans and a resilient economy leading to higher
consumer confidence contributed to the big push.
The pickup boom was evident. Detroit’s Big Three, General
Motors Company (GM), Ford Motor Company
(F) and Chrysler, sold 157,480 full-size pickup trucks during the
month, up 25% from Jun last year. As a result, average prices of
pickups went up 2% year-over-year to $40,361 in Jun, as Kelley Blue
Book has revealed.
No doubt, there would be a strong pent up demand, as average age of
vehicles on U.S. roads is more then 11 years now. Its worth to
mention that interest on auto loans was at near historic low in
June. According to Bankrate.com, the average rate on a four-year
car loan is 2.7%. The low rate is sustainable for a near term, as
Fed Chairman Ben Bernanke has pledged to maintain short-term
interest rates at record lows until the unemployment rate reaches
6.5%.
Let us take a look how the major automakers have performed during
the month.
Detroit Big Three
Among these three major players, Ford posted the biggest gain in
sales. The automaker recorded a 13.4% rise in sales to 235,643
vehicles, driven mainly by strong demand for its pickups and small
cars. F-Series continued to be its most popular pickup while Ford
Fiesta and Focus small cars were consumers’ favorites during the
month.
GM posted a 6.5% increase in sales to 264,843 vehicles, making June
its best month since Sep 2008. The company’s Chevrolet brand was
the big gainer (especially Cruze) while Silverado pickup was its
top-selling vehicle.
Chrysler Group – controlled by Italy’s Fiat SpA
(FIATY) – recorded an 8.2% rise in sales to 156,686 vehicles,
making its best June since 2007. Ram full-size pickup with a 24%
gain and Jeep Grand Cherokee SUV with a 33% rise were the biggest
gainers during the month.
Japanese Big Three
Toyota Motor Corp. (TM) posted a 14% rise in sales
to 195,235 units due to a strong demand for its Camry sedan, Prius
hybrid and the newly redesigned Avalon sedan. These three models
recorded nearly fourfold increase in sales in Jun.
Honda Motor Co. (HMC) reported a 9.7% rise in
sales to 136,915 vehicles. The rise was attributable to strong
sales of its Accord and Civic sedans as well as some SUVs.
Nissan Motor Co. (NSANY) posted a 12.9% increase
in sales to 92,237 units, it’s best-ever June sales. Thanks to
double-digit gains in Altima and Sentra sedans and fourfold
increase in Leaf electric car sales after a price reduction earlier
this spring
Other Big Automakers
Among the other major automakers, Germany’s Volkswagen
AG (VLKAY) and Korea’s Hyundai Motor succumbed to intense
competition in the industry. Volkswagen posted a 3.2% decline in
sales to 36,957 units while Hyundai saw a marginal 1.9% rise in
sales to 65,007 units in Jun.
Outlook
Strong pent-up demand, easier car finance and improving
macroeconomic conditions will continue to act as a catalyst to
rejuvenate U.S. auto sales to the pre-recession level. According to
Autodata Corp., sales in the first half of the year were the best
since 2007 at 7.8 million vehicles. Full-year sales are expected to
be around mid-15 million on a SAAR basis, compared with 14.5
million units in 2012.
FORD MOTOR CO (F): Free Stock Analysis Report
FIAT SPA (FIATY): Get Free Report
GENERAL MOTORS (GM): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
NISSAN ADR (NSANY): Get Free Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
VOLKSWAGEN-ADR (VLKAY): Get Free Report
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