US Big 3 grab more auto sales
DETROIT – The Detroit Three sold 50.2 percent of the light vehicles purchased by U.S. consumers last month, capturing a majority of the market for the first time since August 2009, as the effects of Japan’s March earthquake continued to rock the auto industry.
Chrysler led major U.S. automakers with a 30.2 percent year-over-year sales gain in June. Sales grew 10.6 percent at GM and 13.3 percent at Ford.
But shortages of cars on Toyota’s and Honda’s lots kept their consumers out of showrooms, dragging each of their sales down 21 percent and holding the overall U.S. annual sales rate to 11.5 million – its lowest level since August 2010 and well below analysts’ expectations.
“The Japanese automakers really got hit hard, much harder than any one of us anticipated,” said Jesse Toprak, an analyst with TrueCar.com.
Despite growing unemployment, automakers said the low Japanese inventories, not the economy, bore most of the blame for the slow U.S. sales rate. As Toyota and Honda ramp up production, dealers should restock their lots this fall. That, automakers said, should improve sales in the second half of the year.
While some small-car buyers were waiting last month, large-vehicle shoppers were buying.
Shortages of Japanese small cars and dropping fuel prices combined to give truck, SUV and crossover sales 49 percent of June U.S. light-vehicle sales, compared with a 50.1 percent share for passenger cars. That’s a recovery from a dip to 47.4 percent in April, when cars made up 52.6 percent of U.S. sales, according to Autodata.
“There’s a big asterisk on the car market being that, industry-wide, particularly for us, there was some significant shortages,” said Bob Carter, U.S. chief of the Toyota division.
Low inventories, especially from Honda and Toyota, dragged down the June seasonally adjusted annual rate to 11.5 million units, despite year-over-year sales gains from Detroit automakers and expectations for a better performance.
Also hurting June sales was a tax change. Ford analyst George Pipas said California consumers held off late-June purchases in anticipation of a 1 percentage-point decrease in the sales tax that took effect Friday. Ultimately, the June sales rate hit its lowest point since August 2010 As a result of the weak performance, the U.S. sales rate for the first half of the year averaged 12.6 million units – below the 2011 pace of 12.8 million to 13.3 million predicted by Ford and GM. Still, Japanese inventories should improve by fall, so both automakers are sticking with their forecasts, expecting the sales pace to rise to around 13 million by August.
“There’s a lot of moving parts – the economy, the issues in Japan, the run-up in oil prices,” Ford’s Pipas said. “But if you try to normalize this, I think you probably would have had a first-half sales rate that would continue to be around (12.8 million) into the second half.”
Don Johnson, GM’s vice president of U.S. sales operations, said the biggest question in forecasting the U.S. auto sales recovery is, “ ‘How quickly are the Japanese going to rebuild their inventory?’ I would say that’s a bigger risk than the unemployment rate.”
Shortages of Japanese vehicles helped give Ford an 18.4 percent U.S. market share, its highest since May 2007.
In addition, a shortage of Japanese cars propelled the Chevrolet Cruze to the position of top-selling car for the first time. That’s a position traditionally occupied by the Toyota Camry. With consumers turning to larger vehicles or waiting on a Japanese small car purchase, the average price paid by a consumer for a vehicle hit an all-time high in June, at $30,009, according to TrueCar.com.
After seeing U.S. inventories down 42 percent from 2010 levels, Toyota is rebuilding inventory. Eight of the automaker’s 12 North American-built models returned to full production in June, with rest of Toyota production to recover by September. Dealership stock should approach normal levels by mid-fall, said Randy Pflughaupt, Toyota’s head of U.S. sales administration. To get consumers’ attention, a no-interest financing summer clearance event starts this month. An all-new Yaris also will join a new Camry, Prius V and Scion iQ in dealerships by year’s end, said Don Esmond, Toyota’s U.S. automotive operations chief.
Nissan’s inventories have recovered sooner than those of its domestic counterparts. It managed to see its U.S. share inch up last month, as its sales grew 11.4 percent off inventory in its namesake brand that finished the month at an analyst-recommended 62-day supply, Nissan division chief Al Castignetti said.