Mario So Funny

June Sales Divided As Industry Anticipates Second Half

By Bill Visnic July 1, 2011

An inventory famine, high gasoline prices and a stuttering economic outlook couldn’t combine to completely knock down auto industry sales in June, as early-reporting major automakers – those non-Japanese makers not hammered by the supply disruption caused by March’s earthquake in Japan, that is – on Friday reported double-digit sales gains compared with June, 2010. Considering the variety of obstacles in the market, June’s results largely were viewed with optimism.

Automakers sold 1,093213 vehicles in the U.S., a 7.1 percent increase from a year ago but the Seasonally Adjusted Annual Rate (SAAR) came in at only 11.4 million vehicles – the lowest SAAR of 2011 and below 11.8 million of May. Of that total, General Motors, Ford and Chrysler accounted for 50.3 percent of market share – the highest level since September 2008 when they had 52.9 percent of the market.

For the Japanese automakers, June probably represented the depth of their despair, as production both in Japan and in the U.S. is being restored on a quicker-than-expected timeline, but the month was a rough ride. June sales for American Honda Motor Co. Inc. (83,892) and Toyota Motor Sales USA Inc. (110,937) hadn’t been as low since June, 1997. Toyota’s June sales plunge amounted to 21.1 percent, Honda’s 21.3 percent. The months-long supply crisis has dragged down Toyota’s U.S. sales (including its Lexus upscale division) to a point that the company is trailing 2010’s first-half sales performance by 4.6 percent and Honda barely managed to keep its corporate head above water, with first-half sales up just 1.6 percent compared with the first half of 2010.

Of the three major Japanese automakers, only Nissan North America Inc. ran the June gauntlet unscathed: Nissan sales were up 11.4 percent to 71,941 units. “We are pretty much through the crisis,” Al Castignetti, vice president and general manager of the Nissan division, told AutoObserver. “In comparison to last month we are in much better shape, especially on Versa, Sentra, Juke and Rogue,” all models that were in short supply in May. Nissan started the month with a scant 49-day supply of vehicles but at least was able to rebuild inventories somewhat, ending June with a 62-day supply.

Happier Faces In The U.S., Korea
Contrast Japan’s pain with the high-momentum Hyundai Group, largely unaffected by the Japan production crisis. Sales at Hyundai Motor America set an all-time sales record for June (59,209 units) and the Group’s Kia Motors America sold 45,044 vehicles for the month, a 41.2-percent hike that drove Kia to a first-half gain of 44 percent. Combined, the two companies posted a 25.4-percent gain compared with last June. Hyundai’s first-half sales of 322,797 also set a new record and represented a 26-percent leap over the same period last year.

For the U.S. automakers, it wasn’t earthquake-constrained supplies so much as larger marketplace barriers that probably conspired to dampen sales. Gasoline prices, though easing as June progressed, still were are the top of concerns for General Motors Co., Ford Motor Co. and Chrysler Group LLC as these companies continue to position their truck lineups to a buying population increasingly orienting to other options. New gyrations in the economy also have weighed against the sustained comeback for pickups, in particular, that domestic automakers had hoped for after a promising first quarter for truck sales.

Again in June, Chrysler established itself as the U.S.’s No. 3 seller, its 120,394 sales a resounding 30.2-percent gain over June, 2010, and establishing an almost five-figure lead over Toyota. Sales for the company’s Jeep brand leaped by 74 percent and are up 49 percent for the first half of 2010, while the Ram truck brand improved sales by 34 percent for its 14th consecutive monthly sales gain. The Chrysler brand is lagging, however, its scattered model range off 8 percent in June and 11 percent for the year, including a worrying first-half decline of 24 percent for the Town and Country minivan.

For GM, its 10.6-percent improvement to 194,731 sales compared with last June was highlighted by another resounding sales month for the Chevrolet Cruze compact car, which moved a blistering 24,869 units on the way to propelling the Chevy brand to a 10.9-percent gain for the month. Sales at Buick were up 13.2 percent (and 33.7 percent so far this year) and GMC sales were up 14.9 percent. The Cadillac luxury-vehicle division was off 7.9 percent in June, however, which GM officials attributed to “continuing and planned reduction” in fleet sales.
Don Johnson, GM vice president of U.S. sales, said, “While there have been a couple of bumps, we believe that the recovery will get back on track. Some consumers have decided to sit on their hands and delay their purchases. But that’s temporary. We see a return to our projected SAAR trend line (of 13-13.5 million units) later in the year.”

On its way to a 10.5-percent sales gain in June that led to 194,114 total sales, Ford said it expects prospects to get better in the second half of the year, although economic data is mixed. Ken Czubay, vice president for sales, marketing and service, said things might have been better in June, but “Our data suggests many owners are delaying purchases until the Ford model they want becomes available.” Ford nonetheless built its overall June gain on the sales strength of its all-new Focus compact car and the Fiesta subcompact, both of which took full advantage of Japanese makers’ inability to address demand in the segments that are their traditional strengths. The Focus burst to a 41.2-percent gain for the month, selling a plump 21,385 units and the Fiesta handily outpaced Honda’s popular Fit in first-half sales.

Sales for the redesigned 2011 Explorer crossover were 10,422 in June, a 56-percent hike – and the nameplate’s first-half sales already have exceeded all of 2010. Mustang sales were off 1.5 percent in June, although it did move past chief rival Chevrolet Camaro. Even Ford’s Lincoln brand improved by 16.5 percent in June, although year-to-date performance remains off by 4 percent.

Bill Visnic:  is an Edmunds’ AutoObserver.com Senior Editor.