June auto sales raise the pace
BY DEE-ANN DURBIN Associated Press
Wednesday, July 04, 2012
7/04/12 at 3:12 AM
DETROIT - From mini cars to monster pickups, sales of new cars and trucks surged in June and eased concerns that Americans would be turned off by slower hiring and other scary headlines.
Automakers sold nearly 1.3 million cars and trucks in June, up 22 percent from the same month last year. Chrysler posted its best June in five years. Sales soared at Volkswagen, which is on track for its best year in the U.S. since 1973.
The results allayed fears that growth would stall after a strong start to 2012. Earlier this spring, sales were on track to reach 14.5 million this year, boosted by mild weather and the post-earthquake return of Japanese cars to dealers. But the pace dropped to 13.8 million in May, as the stock market plunged and hiring slowed.
But buyers didn't go away. June's sales pace rose to 14.1 million, according to Autodata Corp. And if sales stay at that rate for all of 2012, it will be the industry's best year since 2007.
There was still plenty of demand from people who bought cars in the middle of the last decade and needed to replace them. Annual sales hit a high of 17 million in 2005, and those cars and trucks are now seven years old.
"If a family in Iowa's only mode of transportation is on the fritz, they are going to buy a replacement vehicle, even if Spain's economy is on the brink of collapse," says Alec Gutierrez, a senior market analyst at Kelley Blue Book.
"In the last two weeks we really went all-out," says Bill Underriner, who sells Volvo, Buick, Honda and Hyundai cars in Billings, Mont.
Colorful ads with holiday deals excited buyers, says Jessica Caldwell, a senior analyst with pricing site Edmunds.com. The Buick Verano small car - one of Underriner's big sellers last month - is now $239 per month for a two-year lease. That's $50 less than usual.
Low interest rates are making deals like the Verano's more attractive. The average interest rate on a 60-month new-car loan is 4.5 percent, down from 6.98 percent two years ago, according to Bankrate.com.
"The affordability of cars is probably at an all-time high," Chrysler Group sales chief Reid Bigland said last week.
Falling gas prices meant buyers were more likely to consider bigger cars and SUVs in June, not just the small cars that sold well at the beginning of the year. Jeep Liberty SUV sales rose 50 percent, and the Ford Explorer jumped 35 percent. Gas averaged $3.43 per gallon at the end of June, down 41 cents from the end of March.
General Motors' sales rose 16 percent, with strong demand for the Chevy Malibu midsize sedan and Volt electric car.
Ford's overall sales rose 7 percent. The Escape small SUV posted its best month ever after a new version of the popular vehicle went on sale.
The sales were welcome news to investors, who have beaten down GM and Ford shares in recent days over losses in Europe. Ford's stock climbed 2 percent to close at $9.60, while GM's stock jumped 6 percent to $20.67.
Toyota's sales rose 60 percent for the month while Honda's climbed 49 percent, but that wasn't surprising. Last year, both companies had little inventory at U.S. dealerships because of the earthquake in Japan.
Original Print Headline: Pace of auto sales picks up
Fiat raising Chrysler stake
ROME (AP) - Italian carmaker Fiat says it is consolidating its ownership of Chrysler by exercising an option to purchase about 3.3 percent of Chrysler equity from a trust fund that manages health care for pensioners.
The announcement Tuesday said the purchase in the coming weeks will raise Fiat's stake in Chrysler to 61.8 percent.
VEBA, as the trust fund is called, is the only other entity with a stake in the company now that government loans to the Detroit automaker have been paid back.
Fiat Industrial Chairman Sergio Marchionne said Fiat would buy the remaining Chrysler equity from VEBA "at the right time, when conditions are created" but likely before 2016.
Marchionne, speaking at the Turin launch of Fiat's new 500L, warned that Italian workers were still at risk as long as the European market remained tight.
"If Europe's current capacity remains the same over the next 24-36 months, there's one too many plants in Italy," he warned, according to Italian news reports.
Chrysler reported Tuesday that its U.S. sales rose 20 percent last month, its best June in five years. Associated Press file