June Car Sales Hit Highest Level in Six Years
June was easily the best month for car sales in six years, analysts say, fueled by low interest rates, strong consumer demand for full-size pickup trucks and a slew of new vehicles.
Before the recession in 2008, declining pickup truck sales indicated the economy was weakening. The home construction industry, which gobbles up pickups when times are good, had come to a screeching halt. Truck sales followed, hitting Detroit automakers in their most profitable segment.
The strong showing in June caps a first half that saw auto sales reach their highest level since December 2007. "It's remarkable to think the industry is within striking range of those pre-recession numbers," said Michelle Krebs, senior analyst for Edmunds.com.
Demand in June for pickup trucks boosted Ford (F) sales by 14 percent. Chrysler sales were up 8 percent, followed by General Motors (GM), which was up 6.5 percent.
Japanese automakers reported solid gains as well. Nissan sales jumped 13 percent, while Toyota (TM) and Honda (HMC) each rose 10 percent. South Korea's Hyundai reported a record June, with sales up 2 percent.
Only Volkswagen sales dropped 3 percent, the third straight monthly decline for the German car company as some products like the Jetta start to age.
What to Expect in the Second Half
Analysts say they don't see much that could slow the sales momentum of the first six months. The factors that juiced sales -- low interest rates, wider credit availability, rising home construction and hot new vehicles -- are likely to remain in place. So far, hiccups in the stock market, higher taxes and fluctuating gas prices haven't dampened demand.
"I think the fundamentals for continued growth in the new vehicle sales industry are intact," Chrysler U.S. sales chief Reid Bigland said last week.
Young graduates may have contributed to a rise in small car sales, said Kelley Blue Book analyst Alec Gutierrez. Gas prices, which averaged $3.60 a gallon nationwide in June and were higher than a year ago, may have steered some buyers to more fuel-efficient models, he said.
Consumer confidence hit a six-year high in June. And the Standard & Poor's 500 index (^GPSC) had its best first half since 1998, up 12.6 percent.
At the same time, auto loan rates remained near historic lows in June. The rate on a four-year new-car loan is averaging 2.7 percent, according to Bankrate.com.
The Associated Press contributed to this report.