June auto sales provide some market optimism
DETROIT — After a yearlong free fall in the American car market, the decline of sales slowed in June, offering hope to automakers that the bottom has been reached and more shoppers might slowly start returning to showrooms soon.
Still, sales were down 7.1 percent from May, which generally is a stronger sales month.
Overall, automakers sold 859,847 vehicles in June, a 28 percent drop from the same month last year, according to Autodata.
Sales declines slowed for four of the six major carmakers, with Ford reporting the smallest drop of 10.7 percent. For many months, Ford and other companies have been reporting year-over-year declines of 40 percent or more.
Even Chrysler, which emerged from bankruptcy protection early in June, saw its decline shrink.
Analysts say that's among the signs the auto industry's slump that began with $4 per gallon gasoline last summer could be leveling off.
"It is unlikely things will get any worse," said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.
The slowly improving economy and government incentives of up to $4,500 to trade in inefficient clunkers for new vehicles could lead to modest improvements in the second half of the year, he said.
In anticipation of heightened traffic at dealers and higher sales later this year, Ford has increased its production order by 25,000 vehicles for the third quarter.
"We're making steady progress," Jim Farley, Ford's vice president of marketing, said in a statement. "We remain grounded, however, given challenging industry and economic conditions."
And while Chrysler's sales results were dismal — only 68,297 cars and trucks, many sold due to incentives of more than $4,800 per car — that's about what analysts expected.
"At a time when they are emerging from bankruptcy and trying to reinvent themselves, it is not a huge surprise," Toprak said.
Affordability and rising gas prices — from $2.28 per gallon in May to $2.64 in June — boosted sales of compact cars, some hybrids and larger crossover vehicles, which have the seating and cargo space of a sport utility but are built on car underpinnings so they are more efficient and maneuverable.
GM's decline improved when compared with previous months even though it entered Chapter 11 bankruptcy protection on June 1. GM plans to sell or close Pontiac, Saturn, Hummer and Saab to focus on four core brands — Chevrolet, Cadillac, GMC and Buick.
Analysts had speculated June sales, when adjusted for seasonal variances and multiplied to calculate an annual selling rate, would exceed 10 million for the first time this year. But sales once again fell just shy of that mark at 9.7 million for June. That's a huge reduction from more than 16 million as recently as 2007.
June sales were helped by fire-sale prices at 789 Chrysler dealers fired by the company told to get rid of their inventory by June 9. Also, with GM dropping its Pontiac brand, incentives rose on those models.
