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22nd of July 2018

Economy



US car sales mostly up through June as larger vehicles reign

Leading automakers reported mostly higher US sales for the first half of 2018 on Tuesday, bolstered by a strengthening economy and continued robust demand for larger vehicles despite rising gasoline prices.

General Motors, Fiat Chrysler, Toyota and Volkswagen all reported higher sales through the end of June, while Ford and Honda reported a modest decline even as they described overall market conditions as robust.

Total US auto sales rose 5.2 percent in June to 1.6 million vehicles, while sales for the first half of the year climbed 1.9 percent to 8.6 million, according to Automotive News.

Some analysts have been cautious on the outlook for US auto sales given rising interest rates and trade tariff announcements, which could also inflate the costs of vehicles.

But automakers said US market conditions remained healthy amid solid employment trends and a lift from US tax cuts.

The figures lifted the seasonally adjusted annual rate of US auto sales to 17.5 million, according to data released by Motor Intelligence.com.

That was above the level of 17.1 million predicted by auto analysts at Edmunds.com

"Customers are buying with confidence because the economy is strong and they expect it to remain strong," said Kurt McNeil, General Motors US vice president of sales operations.

GM, the biggest US automaker, reported a 4.2 percent increase in first-half sales to 1.5 million, with sales rising 4.6 percent in the second quarter to 758,376.

The automaker cited double-digit increases in deliveries of pickup trucks and large SUVs in the second quarter.

"Tax reform raised take-home pay, consumer confidence is high and household balance sheets are healthy," GM chief economist Elaine Buckberg said.

Ford executives said the effects of US trade tensions were too uncertain to predict at this point but they agreed with the upbeat assessment of US market conditions.

June sales were "really solid," Mark LaNeve, Ford vice president for US marketing sales and service, said on a conference call with analysts and reporters. Ford's sales declined 1.8 percent for the first half of 2018 to 1.3 million but rose 1.2 percent in June to 230,635.

LaNeve said demand for pickup trucks and other large vehicles was "amazing," with no sign customers were avoiding the vehicles despite higher gasoline prices. US gasoline prices are about 28 percent higher than a year ago.

"When the (price increase) is gradual, it doesn't trigger a shift," he said. "It's when people are afraid they can't get gas, you see a change."

Ford's sedan sales fell 12.6 percent in the first half of 2018, while truck sales rose 4.2 percent n the same period. SUV sales slipped 0.7 percent.

LaNeve said consumers were showing surprisingly strong appetite for more gadgets and other "up-level" features, boosting vehicle prices.

Honda's sales also dipped in the first six months of the year, dropping 0.5 percent. But June sales rose 4.8 percent from June 2017.

At FCA, sales in the first half of the year rose five percent to 1.1 million. They were bolstered by the Jeep and Ram Truck brands.

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