The company’s July sales rose 11 percent from June. Sales jumped 21 percent from July 2009, helped by new automobiles such as the Sorento crossover, which is assembled at the West Point plant, and the Soul hatchback.
Kia parent Hyundai reported July sales increased 6 percent from the previous month. Its sales climbed 19 percent from July 2009, lifted by brisk sales of midsize and smaller sedans such as the Sonata and Elantra.
Industrywide, summer promotions and easier credit lured shoppers back to car buying last month, a relief to an industry worried about June’s sales slowdown.
Every major automaker except for Ford and Daimler said their July sales topped those in June. The biggest monthly sales gains were posted by Nissan, Toyota, Volkswagen, Subaru and Kia.
The industry sold just over 1 million cars and light trucks in July. That’s 6.6 percent higher than in June, when worries were growing that the economic recovery might be faltering. Sales also were 5.1 percent higher than in July 2009, a year where sales fell to a 30-year low.
Jesse Toprak, vice president of industry trends and analysis at the car pricing website TrueCar.com, said growth in truck and luxury sales is a positive sign since buyers are most likely to hold off purchases in those segments when times are tough.
Toprak said there is a great deal of pent-up demand in the market now. He expects that to translate into sales gains in the last half of the year, even if the economy hasn’t fully recovered.
“There are many consumers out there who are making need-based purchases, who can’t wait any longer,” he said.
Expressed as an annual rate, July sales were at a pace of 11.98 million. That’s higher than last year’s total sales of 10.4 million, but still far from the peak sales of 16.9 million in 2005.
Still, July’s gains gave the automakers confidence that a double-dip in car buying doesn’t appear to be developing. “The industry recovery continues to be very modest but also continues to be in the right direction,” said Bob Carter, a Toyota Motor Corp. group vice president.
Summer promotions – which usually begin in August but were pulled ahead by the nervous industry – drew out buyers even though cars weren’t any cheaper than previous months.
As long as employment continues to improve and gas prices stay below $3 a gallon, “sales should rise on a gradual basis,” said General Motors Co.’s chief economist Ted Chu.
There is also steady improvement in car loan approval rates, Chu said. GM announced last month that it would buy a company specializing in loans to customer with poor credit, a significant chunk of new car buyers.
Road construction spurred by federal stimulus money has helped pickup sales, said Emily Kolinski Morris, Ford Motor Co.’s senior U.S. economist. Demand from agriculture, mining and drilling has also held steady even as home construction has languished, she said.
GM’s sales rose 2.6 percent over June and 5.4 percent over last July. Newly launched models such as the Chevrolet Camaro muscle car, Chevrolet Equinox crossover and Buick LaCrosse sedan showed strong increases.
Ford’s sales were flat from June but up 3 percent over last July. Ford’s overall sales were weighed down by a double-digit drop in Mercury sales. Production of the brand stops at the end of this year.
Japan’s Toyota Motor Corp. and Honda Motor Co. saw sales rise from June – 20.3 percent for Toyota and 5.4 percent for Honda – but both saw small decreases compared with last July.
Toyota is still suffering from a rash of safety recalls earlier this year, Toprak said, while Honda hasn’t acted as aggressively as other automakers to lure Toyota buyers. Both automakers also said last year’s Cash for Clunkers program created huge demand for small cars that wasn’t matched this year. The program began in the last six days of July and gave buyers up to $4,500 in tax credits to trade in old cars and trucks.
Ford said September will be a good gauge of the strength of the market, since comparisons to last August will be skewed by Cash for Clunkers. Ford reiterated its forecast of around 11.5 million total U.S. sales this year.
The stall in June’s auto sales didn’t worry Ford’s chief sales analyst. “One month’s sales either way doesn’t really faze us,” said George Pipas.
Other automakers reporting sales Tuesday:
– Nissan Motor Co. said July sales soared 28 percent from June on brisk sales of cars and small SUVs. Sales rose 15 percent compared with July 2009.
– Volkswagen sales were up 13.4 percent from June and 16 percent from July 2009. Sales of the Golf small car jumped 193 percent from last July.
– Subaru sales rose 11 percent compared with June and 10 percent from July 2009, led by the Outback crossover.
– Daimler sales slipped 5 percent from June, but compared to July 2009, sales were up 7 percent. Strong sales of Mercedes-Benz luxury cars offset plunging interest in the Smart minicar.
Most automakers posted higher U.S. sales last month, a sign that Americans are still willing to buy big-ticket items even though concerns linger about the economy and hiring.
After a sluggish June, sales rose slightly at Detroit automakers General Motors Co. and Chrysler. Foreign-based companies like Kia and Subaru posted bigger gains. Ford, meanwhile, had flat sales.
Sales were boosted by easier credit and new versions of cars and trucks ranging from Jeeps to large family wagons. Summer promotions also helped.
“Consumers have been conditioned to think that the summer is a great time to pick up a deal on a new car,” Edmunds.com senior analyst Jessica Caldwell said.
Credit is thawing, with auto loan approvals up for buyers in every tier. GM announced last month that it would buy AmeriCredit Corp. in an effort to expand loans to customers with poor credit and offer more leases.
But the market is still vulnerable. Auto sales have been recovering from a 30-year low in 2009, but the pace has been fitful, with month-to-month sales falling as often as they rose in the first six months of this year.
Most automakers saw sales fall from May to June as shoppers avoided showrooms due to economic worries.
But when final sales figures are tallied late Tuesday, July could be one of the strongest sales months this year, and better than last July, when the government’s “Cash for Clunkers” rebate program helped only a few days of sales.
Sales at General Motors Co. rose 2.6 percent over June, helped by promotions to make room for 2011 models. Newly launched models such as the Chevrolet Camaro muscle car, Chevrolet Equinox crossover, Buick LaCrosse sedan and Cadillac SRX crossover showed strong increases. Crossover vehicles are roomy inside like a truck, but are usually built on a more nimble car platforms.
Ford Motor Co., which has enjoyed a strong 2010 so far, said its sales were flat from June. They rose 3 percent compared with July last year, lifted by stronger sales of its Ford-brand cars and trucks.
Ford’s overall sales were weighed down by a drop in Mercury sales. Production of that brand stops at the end of this year. Sales at the Lincoln luxury brand slid 16 percent, largely because of falling demand for the Town Car sedan, which ends production next year.
Japan’s Honda Motor Co. said sales rose 5 percent from June, but fell slightly from a year ago amid weaker demand for small cars that benefited from last year’s Cash for Clunkers program.
Any second-half recovery in auto sales depends on consumer spending now that government stimulus and businesses inventory building have run their course, said Ted Chu, GM’s chief economist. As long as employment continues to slowly improve and gas prices stay below $3 per gallon, sales should rise gradually.
“I think pent-up demand is going to continue to be the driver,” he said.
Automakers are continuing to limit deals, which have hurt profits in the past. TrueCar.com estimated that incentive spending, at an average of $2,831 per vehicle, was down 1 percent industrywide from June.
Jeff Schuster, director of global forecasting at J.D. Power and Associates, said the sales pace dropped off in the last half of July, likely because of the lack of big incentives.
Subaru sales rose 11 percent compared with June. Sales rose 10 percent from July 2009, with the Outback crossover leading the pack.
Daimler AG sales slipped 5 percent from June. Compared with July 2009, sales rose 7 percent, as strong sales of its Mercedes-Benz luxury cars offset plunging interest in its smart brand.
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