U.S. auto sales fell 27.7 percent in June, marking the smallest drop for the industry in nine months while dashing hopes that demand would rise to a 2009 high.
Ford Motor Co.'s 10.7 percent slide, its narrowest decline in 16 months, wasn't enough to keep the seasonally adjusted sales rate from slipping to 9.5 million, below analysts' projections of 10 million. June's SAAR retreated to April levels, before the Chrysler and General Motors bankruptcies, and was well below the 13.1 million from June 2008.
Still, the industry is recovering, said Patrick Archambault, an analyst with Goldman Sachs.
"Every single month has been better," he said. "We're in a bit of a holding pattern here for one month, but there's a lot of market drivers that are turning positive that should really help sustain an improvement once you get into the second half" of the year.
Ford fared better than other major automakers. It now stands at No. 2 in U.S. sales through the first half of the year after ceding the spot to Toyota Motor Sales U.S.A. Inc. in 2007. Ford's market share grew to 16.1 percent, ahead of Toyota's 16.0 percent and lagging GM's 19.7 percent.
GM's June sales were down 33.4 percent, and Chrysler Group LLC tumbled 41.9 percent, as both U.S. automakers slashed deliveries to fleets. Toyota slid 31.9 percent for its second-smallest drop of the year. Nissan North America's 23.1 percent decline was its smallest since its last monthly sales gain, in August.
American Honda, the only one of the top six automakers to post a sales gain in June of 2008, slid 29.5 percent last month.
Subaru had the only increase, up 3.4 percent. The Hyundai recorded a 24 percent decline, its weakest performance this year, while affiliate Kia fell 5.1 percent. BMW Group's sales were down 20.3 percent, their smallest slide since January.
Back below 900,000
Industry sales fell to 860,101, after rising above 900,000 in May for the first time this year.
Sales rates have ranged from 9.1 million to 9.9 million so far this year, stuck at 27-year lows. June's results, depressed as they were, managed to reduce the decline for the year to 35.1 percent.
Last month's percentage changes come in comparisons to June 2008, when the industry fell 18.3 percent. The industry's decline accelerated last summer as gasoline prices soared to their highest point on record, with AAA data stretching back to 1974. Sales rates plunged even more dramatically in the fall as the United States fell deeper into a recession that's now in its 20th month.
Car sales fell 31 percent last month, and trucks slid 23.1 percent, gaining some share after last summer's fuel prices curbed their sales.
Ford posted overall increases for its Fusion sedan, Escape crossover, Expedition SUV, Ranger truck and the Volvo brand. Retail sales for F-series trucks also increased from the previous year, the automaker said.
The second quarter was a "breakthrough" for Ford, Jim Farley, group vice president for marketing and communications, said on a conference call. While sales didn't increase, consideration and brand image did, he said.
Ford also benefited from year-ago comparisons that no longer include Jaguar and Land Rover. Monthly sales for those brands have been tallied by their new owner, Tata Motors, since June of last year.
Chrysler said today it would run a July "summer clearance" promotion. The company will offer 0 percent financing for 60 months through GMAC Financial Services on some 2009 models, or up to $4,000 cash. Current Chrysler Group owners also may receive up to $1,000 cash on some 2008 and 2009 models.
Chrysler said it also will add up to $750 to the government's cash-for-guzzlers voucher for its current owners.
Chrysler gave June incentives worth $4,873 per vehicle sold, according to the auto information site Edmunds.com. The industry average was $2,930.
The automaker's fleet sales plunged 95 percent in June, while deliveries to individual customers fell 16 percent. Chrysler emerged from bankruptcy 10 days into the month after eliminating 789 dealerships.
GM's decline included a 49 percent drop in fleet sales. Both it and Chrysler had extended plant shutdowns in June.
Buick and Pontiac brands posted GM's smallest sales declines -- 10.7 percent and 16.4 percent, respectively. On Tuesday, GM said it would offer 0 percent financing for up to 72 months on most of its Pontiac brand and some other vehicles. It entered bankruptcy June 1 and plans to phase out Pontiac next year, along with selling Hummer, Saab and Saturn.
Hope for the second half
June marked the 24th year-over-year monthly decline in 25 months. But analysts still foresee some recovery in the next six months.
Goldman Sachs' Archambault pointed to results of the consumer confidence index measured by the Conference Board, a market information group. It had grown steadily from record-low levels in February, with data stretching back more than 40 years. The consumer confidence index took a small hit in June, but was still double February's levels.
“On a six-month lag basis, consumer confidence has been a strong predictor, so it still points to a back-half recovery,” Archambault said.
Analysts forecasting a second-half improvement in sales also say the cash-for-guzzlers legislation President Barack Obama signed last week will improve car-buying interest and perhaps generate sales.
The government may not complete rules for the program until July 23, so consumers who were waiting for the law to pass may stay home for another month, said market analyst Chris Hopson, of IHS Global Insight.
The measure offers vouchers of as much as $4,500 to consumers who scrap gas-guzzling vehicles and buy new ones with better fuel economy. Predictions of the law's effectiveness in boosting sales have been mixed. But Goldman Sachs' Archambault said it should bump sales rates starting in August.
He said: "If all it does is add another 100,000 units to August, that's going to add another 1.2 million units to the SAAR."
Richard Truett contributed to this report.