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Originally published July 1, 2014 at 5:04 PM | Page modified July 2, 2014 at 6:34 AM

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GM defies dire predictions as June auto sales rev up industry

New models are helping GM take advantage of an improving auto market despite a spate of recalls and the unveiling of a compensation plan for those families that lost members to crashes caused by faulty ignition switches.


Bloomberg News and Los Angeles Times

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General Motors surprised investors with a U.S. sales gain in June after analysts projected a decline. Ford, Chrysler and Nissan beat estimates in the industry’s best month since July 2006.

The rate of sales, adjusted for seasonal trends, jumped to 16.98 million, the fastest in almost eight years, according to researcher Autodata.

Light-vehicle sales rose 1.2 percent to 1.42 million vehicles. That exceeded the average analyst estimates for a 16.3 million rate on 1.37 million sales.

GM’s sales rose 1 percent, beating the average analysts’ estimates for a 6.3 percent decline last month, even as its vehicle recalls rose to a U.S. record.

“General Motors is amazingly resilient,” said Michelle Krebs, a senior analyst at AutoTrader.com. “Better-than-expected sales in June were reported against a backdrop of ugly news, from the unveiling of the victims’ compensation plan to another massive recall, Krebs said. ”“Consumers recognize that the products GM is offering now aren’t the same as the recalled models. If you look at what’s selling, it’s the new stuff that’s doing really well.”

While struggling with troubled products dating back more than a decade, GM’s newly designed vehicles drove sales last month to a total 267,461 vehicles. Buick sales rose 18 percent, led by deliveries of the new Encore small SUV, for its best June since 2006. Chevrolet Tahoe SUV sales almost doubled, while Cadillac Escalade deliveries increased 84 percent and Chevy Suburban rose 73 percent.

The new models are helping GM take advantage of an improving auto market. Aided by available credit and a strengthening economy, with housing starts that remained near the 1 million mark in May, U.S. auto sales are headed for the biggest year since 16.15 million vehicles were sold in 2007.

Chrysler’s deliveries rose 9.2 percent in June, the company’s 51st consecutive monthly increase, while Ford’s light-vehicle sales decreased 5.8 percent, less than analysts’ estimates that projected a 6.6 percent decline. Toyota’s sales trailed analysts estimates.

For the last two months, industrywide auto sales have been running at an annualized rate of 17 million, including medium and heavy trucks, John Felice, Ford’s U.S. sales chief, said Tuesday on a call with analysts and reporters.

“It was a really solid run rate the past two months for the industry,” Felice said. “We expect that to continue, especially into the first part of July with the promotional push by the industry” around July 4.

Chrysler delivered 171,086 cars and light trucks, aided by a Jeep brand sales gain of 28 percent, according to a statement from the company. The third-largest U.S. automaker topped the average of eight analyst estimates for gain of 5.9 percent, helped by a 24 percent increase in sales of the Town & Country and a 22 percent gain by the Grand Caravan, both minivans.

Ram pickup sales rose 12 percent to 33,149, the Fiat-owned company said.

“In spite of two fewer selling days in June versus a year ago, we were able to increase our sales 9 percent and post our strongest June sales in seven years,” Reid Bigland, Chrysler’s U.S. sales chief, said in the statement.

Toyota had U.S. sales of 201,714 units, a 3.3 percent increase from June 2013.

“Sales in the first half of 2014 indicate a steadily recovering industry, and we expect this pace to increase as we move into the second part of the year,” said Bill Fay, Toyota division group vice president and general manager.

Honda’s sales were flat. Sales of most models declined, including the Odyssey minivan and CR-V SUV, but sales of the Accord and Civic sedans were up.

Nissan’s sales reached 109,643 vehicles, a 5.3 percent increase compared with the prior year and a June record. Subaru reported sales of 41,367 last month, a 5 percent increase and the company’s best-ever June sales.

Mazda sales rose 16.5 percent to 26,208 vehicles.

Hyundai sold 67,407 vehicles last month, up 3.7 percent. The automaker completed its best-ever first half of the year — selling 364,434 vehicles — and best-ever single sales month for its Sonata family sedan, garnering sales of 23,672.

The Volkswagen brand had the weakest performance of the major automakers in June, selling 28,827 vehicles, a 22 percent decline from the prior June.

The industry’s sales through the first half of 2014 are expected to reach 8.1 million, a 4 percent increase over the same period in 2013, according to a joint estimate from J.D. Power and Associates and LMC Automotive.

“New-vehicle demand in the first half of 2014 has been robust, as evidenced by both strong sales and record transaction prices,” said Thomas King, a J.D. Power vice president. “Looking forward, we expect that strong sales momentum to carry into the second half of the year.”

The sales prices for autos during the first six months of 2014 hit record levels, averaging $29,630. That’s up from $28,880 a year ago. Consumer spending on new vehicles through the first half of the year also reached a record $194 billion, a $14-billion increase from the same period in 2013.

Buyers are taking out longer loans and leasing more often.

Loans with term of at least 72 months accounted for 31.8 percent of purchases during the first half of 2104, up from 30.2 percent in 2013, J.D. Power reported. The numbers don’t include sales to government agencies, rental car fleets and commercial customers.

Consumers are now using leases for 26 percent of their purchases, compared with 23.8 percent for the first half of 2013.



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