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Gas price drop spurs truck sales, but sales of small cars stay strong

DETROIT — Gas prices hit a sweet spot for automakers last month. They fell far enough to spur pickup truck sales, yet remained so high that small cars sold well, sometimes just hours after reaching dealers' lots.

That made June a good month for General Motors and Ford, which have traditionally relied on truck sales and now have strong lineups of smaller, fuel-efficient models as well.

Toyota and Honda couldn't take advantage, however. Their sales plummeted more than 20 percent each as they ran short of cars because of the ongoing problems from the March earthquake in Japan.

Those declines — and the continuing weakness in the U.S. economy — meant sales grew more slowly in June than they might have. U.S. sales rose 7 percent to 1.05 million, while analysts had expected a double-digit gain.

General Motors and Ford both said their sales rose 10 percent. And the Chevrolet Cruze small car vaulted past perennial bestsellers like the Toyota Camry and the Honda Civic to become the bestselling car in America. Chrysler's sales increased 30 percent, thanks to popular new products like the Jeep Grand Cherokee and Chrysler 200 sedan.

The drop in gas prices lured more pickup buyers. Chrysler reported a 35 percent increase in Ram truck sales, while Chevrolet Silverado sales rose 5 percent. Any jump in pickup sales helps the Detroit automakers, which sell more than five times as many pickups as foreign-based brands. But even Nissan benefited. Sales of its Frontier small pickup rose 51 percent.

Small cars also remained hot sellers. Sales of the Cruze more than doubled those of the car it replaced, the Chevrolet Cobalt, while sales of the Ford Fiesta subcompact were up 438 percent from last June.

But automakers could have sold more small cars without the supply disruptions in Japan. Sales of the Toyota Prius hybrid fell 61 percent to 4,340, their lowest level in seven years, according to TrueCar.com, while Honda Civic sales were down 35 percent. U.S. automakers sold as many small cars as they could make, but they couldn't meet the demand for small cars alone.

Toyota said it expects to deliver 36,000 Prius hybrids to U.S. dealers this summer and eventually top last year's sales. Don Esmond, Toyota's senior vice president for automotive operations, said the company expects production in Japan to be back to normal levels by the end of this month, while North American production will be back to 100 percent in September.

But concerns about the weak economy are hanging over the industry. Unemployment remains high, incomes are flat and consumer confidence — an important measure of whether or not cars will sell — slipped to a seven-month low in June.

Some analysts are already lowering their expectations for the year. Don Johnson, GM's vice president of U.S. sales, said he now expects total industry sales to be at the low a range of 13 million to 13.5 million vehicles. J.D. Power and Associates lowered its full-year sales forecast slightly to 12.9 million.

"Things aren't quite as healthy in the current environment as expected earlier this year," said Jeff Schuster, J.D. Power's executive director of global forecasting.

June upswing

Most major automakers' reported strong June sales. Here's a look at the percentage change in U.S. sales compared to June 2010:

Kia: + 41 percent

Volkswagen: + 35 percent

Chrysler: + 30 percent

Hyundai: + 15.6 percent

Nissan: + 11.4 percent

General Motors: + 10 percent

Ford: +10 percent

Toyota: – 21 percent

Honda: – 21 percent



June upswing

Gas price drop spurs truck sales, but sales of small cars stay strong 07/01/11 [Last modified: Friday, July 1, 2011 10:45pm]
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