August 9, 2022

Carmakers See Slower Growth in Auto Sales in June

G.M. estimated that the industry’s seasonally adjusted, annualized selling rate fell to its lowest level of the year, slightly below May’s level of 11.8 million. The selling rate, a closely watched measure of the industry’s health, fell to 11.8 million in May after topping 13 million in February, March and April.

But company officials and analysts said they still expect sales to rebound later in the year.

“We continue to believe the economy will recover from the current short-term slowdown into the second half of the year,” Don Johnson, G.M.’s vice president for United States sales operations, said on a conference call. “Some consumers have decided to sit on their hands and delay purchases, but we view this as temporary.”

Sales rose 10 percent at both G.M. and the Ford Motor Company last month, compared with a year earlier. Excluding 2010 sales by the Volvo brand, which Ford has since sold, Ford’s sales were up 14 percent.

Chrysler, meanwhile, said its sales rose 30 percent.

G.M. and Ford said passenger cars accounted for the bulk of the increase, though they said truck sales were up as well. Executives said buying patterns shifted toward larger vehicles later in the month as gas prices dropped in much of the country.

“Strong demand for Ford’s fuel-efficient cars and crossovers continues, and we now are seeing truck buyers return to the market with significant appetite for our fuel-efficient V-6 engines,” Ken Czubay, Ford’s vice president for United States marketing, sales and service, said in a statement.

For the first half of 2011, G.M. sales were 17 percent higher than in the same period of 2010. Ford’s sales from January through June were up 9 percent.

Volkswagen said its sales rose 35 percent last month. Subaru, which had to cut output due to parts shortages, said sales were down 8 percent. Other automakers were scheduled to report their June sales Friday afternoon.

The slowdown in May and June has raised some concerns about the strength of the economy over all. Rising auto sales were a bright spot in the early part of the year.

“June’s sluggish sales rate will likely fuel the debate whether there is deterioration in underlying demand due to the softening in the macro environment,” Brian A. Johnson, an analyst with Barclays Capital, wrote in a report to clients.

Japanese automakers have been struggling since March to deal with production disruptions caused by the earthquake and tsunami in their home country. Many Toyota dealerships are sold out of the Prius, a hybrid car made in Japan, and other models built in North America have become relatively scarce because they contain Japanese-made parts that were in short supply for several months.

Toyota responded to the inventory shortages by pulling many discounts, but it introduced new deals in June after traffic at dealerships slowed dramatically.

“Things actually were going along pretty well in March and April, and the shortage hit us badly,” said Earl Stewart, owner of Earl Stewart Toyota in North Palm Beach, Fla.

His dealership sold 88 Prius cars in March but only 12 in June before running out. Mr. Stewart said his new-car department was profitable early in the year but lost money in May and June, as sales went from an average of 265 a month to about 140 in May and then 180 last month.

“They put the incentives back on, but you can’t un-ring a bell,” Mr. Stewart said. “The message got out to a lot of people. It had a psychological negative impact on the Toyota buyer.”

To keep shoppers from sitting on the sidelines — or worse, choosing a competitor’s readily available vehicle — Toyota and Honda have begun offering incentives to people who order a car even if it does not arrive at the dealership for several months. Normally, incentives are available on vehicles that are in stock or delivered in the same month.

“Fortunately for them, Honda and Toyota customers are loyal to their brands and they’ve likely deferred their new-car purchases until inventory is available,” Jessica Caldwell, director of industry analysis at Edmunds.com, a Web site that provides car-buying information to consumers.

Toyota increased incentives by 31 percent from May, though the level remained about $500 a vehicle below the industry average of $2,165, Edmunds.com reported.

Tight supplies of Japanese vehicles have helped push up prices across the industry, by giving other carmakers less motivation to offer big discounts. Prices for small cars have risen the most, given the increased demand for fuel efficiency.

The industry’s average transaction price topped $30,000 for the first time ever in June, rising 2.9 percent from a year earlier to $30,009, according to TrueCar.com, which tracks vehicle sales and pricing.

Analysts said they expected sales to remain somewhat sluggish through much of the summer but pick up later in the year. Toyota and Honda have said their production levels will return to normal within the next few months, though it could take a while for dealer stocks to reach ideal levels.

“Incentive levels $500 below the first-quarter average and depleted vehicle inventory have added to the pressure as the month progressed,” said Jeff Schuster, the executive director of global forecasting for the research firm J.D. Power and Associates. “However, the fundamentals remain in place for a marked return to the recovery pace set in the first four months of the year.”

Article source: http://feeds.nytimes.com/click.phdo?i=4018f9dbcf62f3948626dfecec586262

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