Are the glory days back again for the auto industry? June sales came in at a pace that was much stronger than many analysts were expecting and could hit the rate of 16 million vehicles.
“I’m not surprised,” said Karl Brauer, senior analyst with Kelley Blue Book. “I feel like the market continues to be strong and any sign of good news with the economy is convincing people it’s time to go buy a new car or truck.”
While almost every auto maker reported stronger than expected sales in June, the numbers from the Big 3 and the strength of their truck sales were noteworthy.
General Motors, Ford, and Ram all reported full-size pickup sales of greater than 20 percent as contractors and small business owners continue to re-stock their work fleets.
Kurt McNeil, Vice President of U.S. Sales for GM is seeing exceptionally strong pickup sales in middle America. “We look at small business owners, those owners that buy four or less trucks for their small businesses and that was up 40 percent.”
June Auto Sales
-General Motors (up) 6.5%
-Ford (up) 13.4%
-Chrysler (up) 8.2%
-Toyota (up) 9.8%
-Nissan (up) 12.9%
-Honda (up) 9.7%
Strongest Sales Since 2007
The auto industry looks to have hit another gear when it comes to sales growth. In fact, the June sales pace is expected to be the strongest since December of 2007. This time though, the environment is completely different. Back then, automakers, especially the Big 3, were boosting sales by offering big incentives. That’s not happening anymore.
“This time there is genuine demand,” said former GM Vice Chair Bob Lutz. “The economy is improving and people are replacing their cars and trucks.”
Consumers are also paying more for their new vehicles. Kelley Blue Book says the average transaction price (what consumers paid dealers) for new models increased 1 percent in June to $31,663. That’s also an increase of $370 from the average price paid at showrooms in May.
With the average vehicle in the U.S. remaining at almost 11 years in age, many believe there’s still plenty of pent-up demand to keep driving sales.
“The question is how deep is the pent-up demand?” says Brauer. “I think there plenty more out there. This is just the tip of the iceberg.”
—Follow Phil LeBeau on Twitter @LeBeauCarNews.