Top U.S. automakers reported stronger June sales, as consumers continued to snap up sport utility vehicles and trucks in larger numbers, parking for now worries about rising fuel prices, higher interest rates and trade tensions.
Investors have sold off shares in Detroit automakers General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV during the past month. Rising tensions between the United States and its trade partners and threats of tit-for-tat auto tariffs have rattled the auto sector, adding to worries that the U.S. auto industry’s nine-year recovery from the 2008 financial crisis must soon end.
Still, June was a solid month for vehicle demand in the United States, and especially for the SUVs and large pickups that generate the bulk of global profits for the Detroit Three.
A poll of economists by Reuters showed expectations of a seasonally adjusted annual rate of 17.0 million vehicles for the U.S. auto industry in June. U.S. vehicle demand hit a record 17.5 million vehicles in 2016.
No. 1 U.S. automaker General Motors, which stopped reporting monthly numbers beginning April, said its sales rose 4.6 percent to 758,376 for the quarter ended June 30, helped by strong truck sales and a wave of all-new crossovers.
“Customers are buying with confidence because the economy is strong and they expect it to remain strong,” said Kurt McNeil, GM U.S. vice president, sales operations.
Ford, the No. 2 U.S. automaker, said it sold 230,635 vehicles in June, compared with 227,979, a year earlier. Sales of Ford-brand SUVs grew 8.1 percent to 77,453 vehicles, and were a record for the month, the company said.
Ford said its F-series large pickup trucks, the best-selling model line in the U.S. market, were on track to top the previous annual record of 939,511 vehicles sold set in 2004.
Fiat Chrysler said June U.S. sales rose about 8 percent to 202,264 vehicles, led by the Jeep brand, which notched its best June ever with a 19 percent increase.
A positive sign for automakers is that U.S. jobless rates are at the lowest levels since 2000, and average incomes are starting to grow more robustly. Still many analysts are forecasting weaker sales for the second half of 2018 and further declines in U.S. vehicle demand next year.
Rising interest rates are increasing monthly payments for cars and home mortgages, and bankers are tightening terms for vehicle loans, Cox Automotive economist Charlie Chesbrough said during a recent briefing on the industry outlook. “Affordability is getting tighter,” he said.
Cox forecasts U.S. car and light truck sales will decline to 16.8 million vehicles this year, and slide to 16.5 million vehicles in 2020.
General Motors and other automakers have warned sales could drop dramatically if U.S. President Donald Trump imposes steep tariffs on foreign vehicles and imported auto parts, raising prices to consumers and costs to manufacturers.
By Ankit Ajmera