Increased auto sales for June driven by low interest rates, a decrease in jobless claims, low gasoline prices and higher payroll figures, provide additional indications that the U.S. economy is once again on an upward trend.
The Detroit Free Press reports that Americans are buying new cars and trucks at the strongest rate since 2001 and spending more on pickups, SUVs and luxury models.
Despite the excellent sales figures, there are warning signs on the horizon as evidenced by John Humphrey, senior vice president at J.D. Power and Associates automotive practice, who said, “We’re entering into uncharted territory. There will likely be an increase in interest rates. Even a 50 basis point move will have an impact on car sales”. He added that leasing is also at an all-time high of 33 percent of sales. As a result of this, there is a big supply of “soon-to-come-back lease vehicles hitting the market in the next year or two.”
The auto manufacturers reported their sales figures for June with almost all of them showing an increase in sales figures.
Most notable was that General Motors, which announced a 3% drop in sales for June, was the only auto manufacturer showing a decline in sales while Ford, with a 1.5% growth in sales figures, showed the smallest increase amongst the auto manufacturers.
General Motors reported that despite the overall decline in sales, retail deliveries were up 6.8% for June as a result of stronger Cadillac, GMC and Chevrolet sales. Deliveries of pickups increased by 33% for the Chevrolet brand and by 37% for the GMC brand. Sales to individual customers were at their highest level since 2011 while about 20% of its business is now linked to fleets. This has offset the loss in rental-car sales.
Meanwhile, Nissan reported an increase in sales of 13.3% to be the leaders for the month of June. Nissan recorded sales of 124,228 units for June, up from the June 2014 figure of 109,643 vehicles.
Also, Fiat Chrysler, with increased sales of 8.2 percent, exceeded sales growth over Ford for the first time ever. Fiat Chrysler has now reported 63 months of year on year increases in sales.
The National Automobile Dealers Association raised its auto-sales forecast for 2015 from the earlier figure of 16.94 million to 17.2 million vehicles.
The biggest increase is in the sales of small SUV’s which has caught up with small car sales which have declined as a result of the lower fuel prices. Ford analyst Erich Merkle predicts that SUV sales will reach 40% of the market by the end of the decade as millennials start families.
MT4 Chart: General Motors