U.S. sales advance 1% on Chrysler, Nissan, Toyota gains

Chrysler streak hits 51

Strong demand for the Jeep line and other trucks helped Chrysler Group to its 51st consecutive monthly U.S. sales gain in June. Chrysler Group’s June sales rose 9 percent, with Jeep volume climbing 28 percent and Ram brand volume up 14 percent.

Sales rose 11 percent at Fiat and 1 percent at Dodge, but volume slipped 12 percent at the Chrysler brand, the company said.

Overall, Chrysler Group’s light-truck deliveries rose 22 percent while car volume, a weak spot for the company in recent months, slipped 19 percent. Dodge Durango volume rose 9 percent and Chrysler Group’s minivan deliveries rose by more than 20 percent in June.

Ram pickup sales climbed 12 percent in June to 33,149 units, helped by incentives, according to several analysts. It was the best June for Ram pickup volume in 10 years, Chrysler said.

Chrysler is already offering July 4 holiday deals as high as $7,500 on the 2014 Ram 1500 pickup, NADA Used Car Guide said today.

Chrysler Group’s overall sales have climbed 12 percent year-to-date, with Jeep volume up 45 percent, largely on demand for the new Cherokee.

At Kia, June sales edged up to 50,644 units. Hyundai’s deliveries rose 4 percent to 67,407 units in June, with Sonata volume hitting a monthly record of 23,672.

The Volkswagen brand’s U.S. sales slump continued with volume falling 22 percent to 28,827 units.

“With the launch of the ... 2015 Golf GTI, as well as the upcoming introduction of the all-new 2015 Golf TSI and even more fuel efficient diesel engines, we are confident Volkswagen will be back on the shopping list for more customers,” Mark McNabb, Volkswagen of America’s COO, said in a statement.

Among other VW Group brands, Porsche set a June sales record with volume of 4,101, up 11 percent, and Audi reported sales of 16,867, a 23 percent improvement and the luxury brand’s 42nd straight month of record sales.

Unit forecast

U.S. light-vehicle sales were forecast to dip 2.6 percent to 1.37 million in June, based on the average of 10 analyst estimates compiled by Bloomberg.

“Sales may have been pulled ahead into May due to a strong Memorial Day weekend and also due to due to the fact that there were five weekends in the month [of May],” Barclays analyst Brian Johnson said in a report last week. “It is unclear that the June SAAR factors are adjusted appropriately for ‘payback.’”

In June 2013, industry sales also benefited from one additional weekend of selling, some analysts noted.

Sales at GM, Ford, Toyota, Honda, and Hyundai-Kia were projected to decline in June, while analysts projected gains for Nissan and Chrysler.

Chrysler and Nissan have driven more than half of the industry’s sales growth this year through May, Kelley Blue Book says.

Ideal environment

After a weak start to the year because of severe winter weather, healthy economic fundamentals -- notably low interest rates, a favorable credit environment and rising employment -- have fueled the 4 percent gain in U.S. light-vehicle sales gains through June.

"The economy has remained steady despite a lot of uncertainty overseas," said Ron Stettner, vice president of sales for Mazda North America.

The U.S. auto industry remains on track to top the 16 million sales mark this year for the first time since 2007.

LMC Automotive, citing May sales results and June’s sales pace, last week hiked its U.S. light-vehicle retail sales forecast for 2014 to 13.4 million units from 13.3 million, and its total light-vehicle forecast for the year to 16.2 million units from 16.1 million.

LMC also cited a 55 percent increase in new-model activity in 2014 compared with 2013. Nearly every vehicle segment is benefiting from fresh models, LMC said, noting especially the raft of new small crossovers and small premium cars that have hit showrooms in recent months.

“The U.S. auto market is arguably in the best position and health it has been in since well before the Great Recession,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Sales are robust and stabilizing above a 16 million-unit pace and are back in balance with production levels, keeping inventory in check. While GDP growth remains below ideal levels, the auto market continues to be instrumental in helping drive the economy.”

The average U.S. transaction price for light vehicles was $30,575 in June, down $245, or 0.8 percent, from June 2013, and down $689, or off 2.2 percent, from May 2014, TrueCar Inc. said today.

“We’re encouraged to see continued strength in retail sales while transaction prices and incentives have remained steady,” John Krafcik, president of TrueCar, said in a statement. “And despite PR challenges, among full-line automakers GM now owns the highest transaction prices in the industry at nearly $35,000 -- a tribute to the strength of their new models and incentive spending discipline.”

'Silent price war'

Kelley Blue Book estimated the average transaction price for a light vehicle sold in the United States was $32,342 in June 2014, an increase of 1.4 percent year-over-year.

Still, some analysts are warning of a rising disconnect between average transaction prices, which remain strong, and what is happening in new-car showrooms.

In a report last week, Morgan Stanley analyst Adam Jonas said the annualized rate of sales is becoming “compromised,” most notably by extended loan terms, in what he called “the silent U.S. price war.”

Jonas said some dealers are approving new-car deals that lower monthly payments in return for extended loan terms as long as 7 years and a modestly higher interest rate that drive final transaction prices higher.

“At the end of the month the published data shows higher sales and higher ATPs, giving the image of improved mix when precisely the opposite is occurring,” Jonas said. “More attention should be paid to the risk of customers being taken out of their normal trade cycle, creating a vacuum.”

Ryan Beene contributed to this report.