Ahead of the Bell: June US auto sales
DETROIT (AP) — Confident U.S. buyers snapped up new cars and trucks at a stronger-than-expected pace in the first six months of this year, and analysts don't see much that could slow the momentum for the remainder of 2013.
The things that juiced sales — low interest rates, wider credit availability, rising home construction and hot new vehicles — aren't going away anytime soon. And so far, hiccups in the stock market, higher taxes and fluctuating gas prices haven't dampened demand.
"I think the fundamentals for continued growth in the new vehicle sales industry are intact," Chrysler's U.S. sales chief, Reid Bigland, said at an industry event last week.
U.S. auto sales are expected to have risen 6 to 8 percent in June compared with the same month last year. The auto pricing site TrueCar.com predicts that dealers might have sold cars and trucks at an annualized rate of 15.7 million last month, the best rate since December of 2007.
Automakers report U.S. sales for June on Tuesday.
Sales of pickup trucks — which have been selling at a rate three times faster than the rest of the industry — likely continued at a strong pace in June. Small businesses have been replacing their aging trucks as home construction picks up.
Young graduates may have contributed to a rise in small car sales, said Kelley Blue Book analyst Alec Gutierrez said. Gas prices, which averaged $3.60 per gallon nationwide in June and were higher than a year ago, also may have caused some buyers to look for more fuel-efficient models, he said.
Consumer confidence hit a six-year high in June. And the Standard & Poor's 500 index had its best first half since 1998, up 12.6 percent, although there was some volatility late last month. At the same time, auto loan rates remained near historic lows in June, with the interest rate on a four-year new car loan averaging 2.7 percent, according to Bankrate.com.
The rate could start rising — slowly — by the end of this year. Federal Reserve Chairman Ben Bernanke said last month that the Fed may start to slow a bond-buying program that has suppressed long-term interest rates.
Bernanke's comments didn't impact June sales, analysts said. It often takes buyers six months or more to research and buy a new car, and a stray comment usually isn't enough to sway them. But if the Fed acts as planned, buyers worried about higher interest rates could rush to buy at the end of this year.
Car buying site TrueCar.com expects Ford Motor Co. to lead all major automakers with a 14.8 percent June sales increase, followed by Nissan at 12.4 percent and Honda at 11.3 percent. General Motors sales are expected to rise only 2.3 percent, TrueCar said.
Chrysler's sales are expected to be up 10 percent despite a public flap with the government last month over the safety of some older-model Jeeps. Bigland said Chrysler also lost some sales as it ramps up production of its new Jeep Cherokee, which goes on sale in August. But Ram and Dodge sales helped overcome those losses.