U.S. sales advance 14% in June amid signs of slowdown

U.S. light-vehicle sales rose 14 percent in June, with major automakers posting some of their smallest gains of the year amid signs of sagging consumer confidence and a cloudier economic outlook.

Ford Motor Co.'s 13 percent advance from June 2009 was its smallest monthly increase since November. General Motors Co. recorded an 11 percent increase, its second-smallest in the year's first half. Industry sales on a seasonally adjusted annual basis were 11.1 million, the lowest since February.

"Recent economic news continues to point to a slow recovery with some volatility," Steve Carlisle, GM's vice president of global product planning, said today. "The recovery will be sluggish and continue to boost vehicle sales, albeit modestly."

Jim Lentz, president of Toyota Motor Sales U.S.A., said the entire industry struggled as weakening consumer confidence weighed on sales. His recall-plagued company was up 7 percent in June, its second straight month in that range after incentive-spurred sales surges in March and April.

American Honda's 6 percent gain was its first increase below double digits in five months.

The results show the challenge the industry will have in sustaining comparisons to 2009, when the weakest demand in nearly 30 years sent GM and Chrysler into bankruptcy. For the first six months of the year, U.S. light-vehicle sales were up 17 percent over 2009.

In the first half of 2009, the SAAR failed to top 10 million. June's 11.1 million pace is below what most automakers have forecast for the year.

At Ford Motor, the Ford, Lincoln and Mercury brands were up a combined 16 percent, while soon-to-be-sold Volvo fell 29 percent.

GM recorded its sixth straight monthly gain despite having shed four of its eight brands since its 2009 bankruptcy. GM's surviving U.S. brands -- Chevrolet, Buick, Cadillac and GMC -- had combined sales of 194,828, up 36 percent over a year ago.

Chrysler Group reported a 35 percent sales increase. Subaru gained 16 percent in posting its 13th straight monthly gain. And the Hyundai Group, which includes Kia, jumped 28 percent last month.

Pickup sales were a bright spot for GM and Ford, with GM's full-sized trucks up 27 percent and demand for the Ford F-150 jumping 30 percent.

"The resurgence in large pickup truck sales was a key factor behind June's results," said Don Johnson, GM's vice president of sales.

In addition to strong truck sales, Ford said June car demand climbed 16 percent and SUV sales rose 3 percent. At Lincoln, June sales were off 11.5 percent.

Consumers -- concerned about unemployment and the economic recovery -- are avoiding large purchases, analysts said.

Industrywide deliveries were expected to reach a seasonally adjusted annual sales rate of 11.2 million vehicles, the average of eight analysts' estimates compiled by Bloomberg.

In recent days, GM officials had tempered their views for new-vehicle demand, although the company hasn't changed its official 2010 U.S. sales forecast of 11.3 million to 11.8 million light vehicles.

Some analysts see the results from GM, Ford and other automakers as a sign of underlying weakness across the industry.

GM "is not getting all of the buyers they lost by discontinuing the other brands," said John Wolkonowicz, an analyst with IHS Automotive in Lexington, Mass. "June of last year was totally horrible. To increase sales only 11 percent above that is not good."

U.S. auto sales have "flat-lined" since last year's third quarter because consumers have been unwilling to make big purchases, Mark Fields, Ford's president of the Americas, said last week. The 9.7 percent U.S. jobless rate and continued lower home prices have hurt consumers' confidence and are keeping them out of showrooms, dealers and analysts said.

J.D. Power & Associates cut its estimate of individuals' purchases this year to 9.5 million from about 9.7 million, said Jeff Schuster, an analyst with the researcher. J.D. Power estimates 11.8 million sales, including less-profitable sales to fleet buyers. Annual auto sales averaged 16.4 million from 2000 through 2008 but fell to 10.4 million last year, the lowest in 27 years.

"The consumer is feeling a bit better, but not enough to go out and go back to the old ways of spending," Fields said. "It gives us pause because of the tight labor market and the overall situation in the credit markets."

The Conference Board said this week that its confidence index slumped to 52.9 this month from a revised 62.7 in May. The private research group's June figure was less than the lowest forecast of economists surveyed by Bloomberg.

Showroom traffic has fallen 20 percent at Frank Ursomarso's GMC-Buick dealership in Wilmington, Del.

"The numbers are way down," Ursomarso said. "We're a big banking town, and they've had a tough go in the newspapers with the banking reform bill -- day after day of negative stories."

Ford overtook Toyota Motor Corp. to become the second-biggest automaker in U.S. sales in the first half of 2010. After six months, Ford led the Japanese automaker by 134,810 units. Ford last outsold Toyota in 2006.