Friday, April 20, 2018
Business

U.S. auto sales up in June at fastest growth rate since 2006

DETROIT — U.S. auto sales grew at the fastest pace in eight years in June, surprising the industry and setting it up for a strong second half of the year.

Sales rose 1.2 percent in June to 1.4 million cars and trucks, according to Autodata Corp. General Motors, Toyota, Hyundai and Nissan all had increases. Honda sales were flat, while sales at Ford and Volkswagen were down.

June's annualized sales rate, which estimates annual sales if they stayed at the same pace every month, was 16.98 million. That was the fastest pace since July 2006 and higher than May, which also surprised the industry with its strength.

Jesse Toprak, an auto analyst for car buying site Cars.com, said buyers are out because of low interest rates, a strong stock market — which improves confidence — and great new vehicles. An easing in lending standards is also adding more potential buyers to the market.

"We're getting set up on a very good footing for the second half of the year," Toprak said. "The last two months have exceeded expectations, which tells us that the consumer demand is very strong."

Toprak said he might increase his annual sales forecast from 16.1 million vehicles to 16.3 million based on May and June sales. That compares with 15.6 million vehicles sold in the U.S. last year.

TrueCar estimated that incentive spending rose 1.6 percent in June to an average of $2,735 per vehicle. Both GM and Nissan lowered incentives by 12 percent from June 2013.

Although there might be fewer incentives, buyers are taking advantage of good lease offers and low interest rates. The average interest rate for a 60-month new car loan is 3.18 percent. Three years ago, that was closer to 5.5 percent, according to Bankrate.com.

GM's sales were up 1 percent in June despite a continuing parade of recalls. GM's total safety recalls for the year reached 29 million vehicles on Monday, when the automaker announced six new recalls of 8.4 million cars. Two of those recalls were for ignition switch problems, the same issue that began the company's recall crisis in February.

Kelley Blue Book analyst Alec Gutierrez said GM is benefiting from its new lineup of SUVs, which hit the market at a time when buyers are gravitating toward bigger vehicles. Sales of the Chevrolet Tahoe large SUV nearly doubled to more than 11,000, and sales of the GMC Yukon more than doubled to 3,946. Cadillac Escalade sales were up 57 percent.

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