GM, Ford June sales rise as gas prices fall

By Tom Krisher

Associated Press

Published: Friday, July 1 2011 11:41 a.m. MDT

FILE - Nov. 17, 2010 file picture shows the 2012 model year Ford Focus during its debut at the LA Auto Show in Los Angeles. The new Explorer SUV and the Focus compact are selling as fast as Ford Motor Co. can build them.

Reed Saxon, file, Associated Press

DETROIT — Falling gas prices brought truck buyers back to showrooms last month. Still, pump prices remained high enough that shoppers snapped up smaller cars as well.

Industry analysts expect overall U.S. sales to rise 13.5 percent from last June, to around 1.1 million cars and trucks. Automakers were reporting June sales throughout the day on Friday.

General Motors Co. and Ford Motor Co. both said Friday that their sales rose 10 percent. Chrysler Group's sales were up 30 percent.

The results indicate the auto industry's slow recovery from the recession is back on track after a brief slump in May.

GM said that cheaper gas lured more pickup truck buyers. Chevrolet Silverado sales rose 5 percent and GMC Sierra sales up 8 percent compared with a year earlier. Sales of Ford's F-Series pickups rose 7 percent. Chrysler reported a 35-percent increase in Ram truck sales

Any jump in pickup sales helps the Detroit automakers, which sell more than five times as many pickups as foreign-based brands. But even Japanese brands benefitted. Nissan Motor Co. said sales of its Frontier small pickup rose 51 percent.

Still, GM's sales increases were largely due to smaller, more fuel-efficient models like the new Chevrolet Cruze compact. Sales of the Cruze more than doubled the sales of the car it replaced, the lackluster Chevrolet Cobalt. Gas prices averaged $3.68 per gallon in June, cheaper than in May but hardly inexpensive.

"There is a certain portion of consumers that react to gas prices almost on a daily basis, and they decide what to buy based on those prices," said Jesse Toprak, vice president of industry trends and insights for car pricing site TrueCar.com.

Even with sales rebounding, GM backed off a bit on its full-year sales forecast. Don Johnson, vice president of U.S. sales, said he now expects total industry sales to be at the low a range of 13 million to 13.5 million vehicles.

Johnson blamed the change on stubbornly high unemployment, which contributed to the sales decline in May. Total U.S. sales fell 3.7 percent in May after a string of double-digit monthly increases.

Johnson sees the slow recovery continuing through the rest of the year. He said that even with unemployment around 9 percent, 91 percent of the country is still working. And many are driving older cars.

"There are still people out there looking for a vehicle and in many cases need to replace their vehicles," Johnson said.

The average car on the road now is 10.6 years old, according to the Polk research firm.

Sales were expected to be up around 5 percent from May, when parts shortages caused by the March earthquake in Japan, $4-per-gallon gas and a lack of deals caused a slump.

But the pace of sales has slowed from the beginning of this year. Like GM, some analysts are starting to question the strength of the recovery. J.D. Power and Associates lowered its full-year sales forecast from 13 million vehicles to 12.9 million.

Shortages are keeping car prices high. That's likely to continue through September, J.D. Power said. In the meantime, hiring has slowed and incomes are flat. Consumer confidence — an important measure of whether or not cars will sell — slipped to a seven-month low in June.

"Things aren't quite as healthy in the current environment as expected earlier this year," said Jeff Schuster, J.D. Power's executive director of global forecasting.

One issue for automakers is the lack of small, fuel-efficient cars. Japanese automakers expect earthquake-related shortages of popular products like the Toyota Prius and Honda Civic for several more months, and Detroit automakers can't meet the demand for small cars alone.

The industry began June with a 30-day supply of compact and subcompact cars, and inventory has only gotten tighter since then, Ford's top U.S. sales analyst George Pipas said. That compares to a 51-day supply of all cars and trucks.

Pipas said that instead of moving into mid-size cars, small-car shoppers are simply waiting. Both Honda Motor Co. and Toyota Motor Corp. have said they expect their North American production to be at near-normal levels by late summer, and more cars will get to dealerships soon after that.

Other automakers reporting Friday:

— Volkswagen AG said its U.S. sales rose 35 percent in June on strong demand for its Jetta midsize sedan and other models.

— Nissan said sales rose 11.4 percent on strong demand for smaller vehicles. Sentra compact car sales rose nearly 31 percent.

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