Surprise growth in US sales

DETROIT (AP):

United States (US) auto sales grew at their fastest pace in eight years in June, surprising the industry and setting it up for a strong second half of the year.

Sales rose 1.2 per cent over last June to 1.4 million cars and trucks, according to Autodata Corp. GM, Toyota, Hyundai and Nissan all saw increases over last June. Honda sales were flat, while sales at Ford and Volkswagen were down.

June's annualised sales rate, which estimates annual sales if they stayed at the same pace every month, was 16.98 million. That is the fastest pace since July 2006 and higher even than May, which also surprised the industry with its strength.

Jesse Toprak, an auto analyst for the car buying site Cars.com, said buyers are out because of low interest rates, a strong stock market (which improves confidence) and great new vehicles. An easing in lending standards is also adding more potential buyers to the market.

Toprak said he may increase his annual sales forecast from 16.1 million vehicles to 16.3 million, based on May and June sales. That compares with 15.6 million vehicles sold in the US last year.

May sales were helped by five sunny weekends and the Memorial Day holiday, which got June off to a slow start. But Ford's US sales chief, John Felice, said sales picked up at the end of last month, as automakers started promoting Independence Day sales.

While incentives may be lower, buyers are taking advantage of good lease offers and low interest rates. The average interest rate for a 60-month new car loan is 3.18 per cent. Three years ago that was closer to 5.5 per cent, according to Bankrate.com.

GM's sales were up one per cent over last June, despite a continuing parade of recalls. GM's total safety recalls for the year reached 29 million vehicles on Monday, when the automaker announced six new recalls of 8.4 million cars. Two of those recalls were for ignition switch problems, the same issue that began the company's recall crisis in February.

Sport utility vehicles

Kelley Blue Book analyst Alec Gutierrez said GM is benefiting from its new line-up of SUVs, which hit the market at a time when buyers are gravitating towards bigger vehicles. Sales of the Chevrolet Tahoe large SUV nearly doubled to more than 11,000, while sales of the GMC Yukon more than doubled to 3,946. Cadillac Escalade sales were up 57 per cent.

Toyota's sales rose three per cent as the Camry and Corolla sedans both posted double-digit gains. Sales of the new 4Runner SUV were up 42 per cent.

Ford's sales dropped six per cent as the company cut back on discounts for the F-Series pickup, which is the best-selling vehicle in the US. Ford is trying to limit sales of the outgoing F-Series as it prepares to close its truck plants and change over to a new, aluminum-sided F-150 pickup, which will go on sale late this year. F-Series sales fell 11 per cent in June to 60,560.