Car Sales Have Foot On Accelerator At Mid-Year
DETROIT (WWJ) - Despite dealing with fiscal cliffs, a weak recovery and—just recently—fears of higher interest rates, car buyers show no signs of discouragement. Early indications are when carmakers report their June sales figures on Tuesday, the overall numbers will be the best since December of 2007.
That will put a ribbon on car sales for the first half of 2013, producing one of the brightest spots on the U.S. economy.
"The first half of 2013 was every bit as strong as the auto industry could expect at the beginning of the year, and there's no reason why the next six months can't maintain the same momentum," Edmunds.com Senior Analyst Jessica Caldwell.
Edmunds.com projects June sales to be up 6.3 percent from June of 2012, with Ford and Chrysler both showing double-digit sales gains. Rival forecaster TrueCar.com sees the sales increase closer to 7.8 percent.
"Despite the lackluster performance in financial markets in June, new vehicle sales reached their highest levels in six years – yet more proof that the recent surge in consumer demand is real and not going anywhere," said Jesse Toprak, senior analyst for TrueCar.com. "The better news for the automakers is that they are back to selling nearly 16 million units a year collectively while spending less on incentives, thanks to the best selection of vehicles ever in their showrooms; product is the king once again."
June is also expected to be another strong month for pickup truck sales. The numbers helped by the recovery in housing, and a number of good deals. In addition, General Motors important new pickup trucks are starting to arrive in dealerships.
Chrysler's sales chief Reid Bigland confirms this will be the 39th consecutive month of year over year sales increases. He predicted "mid to high single digits" when Chrysler's June numbers come out, around 8 AM Tuesday morning.
"I think the industry will be in that 6-8 percent up range. Pretty consistent to what we've seen calendar year to date, where the industry's up around 7 percent."
While indications are interest rates will start rising again, Bigland says they are still at historic lows, and pent-up demand remains at a historic high level.
Russ Shelton, who owns Shelton Buick GMC in Rochester Hills, Michigan, sees that with his customer base. Pent up demand tops his list of reasons for strong sales.
"Number one, they've probably waited a little too long. We still have cars that are ten, eleven years old on the road."
Shelton says customers with older vehicles come into the showroom and are impressed by what's available now. He says that's just quantified by GM's recent gains in J.D. Power quality rankings.
"I think we build great product, and it just proves what we already know and makes it better for the customer."
Car companies headed into the last couple of days of the month expecting a very strong close.
"When we close on a weekend for a month, it's usually a pretty good sign," said Ford President of the America's Joe Hinrichs.
"I'd say the industry was really strong in the first half of the month, maybe slowed a bit in the middle of the month. We should see a strong close."
Hinrichs said the mid-month lull was typical, with many consumers waiting for the Fourth of July holiday.
That holiday should get the new month, and the second half of the year off to a strong start.
"We've had a strong first half of the year with new-car sales up nearly 7 percent compared to the first half of last year," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. "The industry continues to benefit from modest improvements in housing, unemployment and consumer confidence."
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