June 2005 US Auto Sales Wrap-up

DETROIT July 3, 2005; Dee-Ann Durbin writing for the AP reported that General Motors Corp.'s sales soared 41 percent in June to their highest monthly total in nearly 19 years thanks to a heavily promoted discount that allowed customers to buy cars and trucks at the employee rate, new sales figures showed Friday.

In response, DaimlerChrysler AG's Chrysler Group said it will match GM starting July 6 with an employee discount program of its own. Despite falling sales, Ford Motor Co. declined to match GM on Friday.

Asian brands also continued their surge last month. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. all posted their best June sales periods ever in the United States, while South Korea's Hyundai Motor Co. said June was its best single month on record.

The seasonally adjusted annual sales rate for June was 17.5 million vehicles, up from 15.4 million vehicles last June and the highest rate so far this year. The rate indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were about 17 million.

Paul Taylor, the chief economist for the National Automobile Dealers Association, said GM's discount boosted sales across the industry.

"Similar to GM incentive pushes in the past, the enthusiasm and increased GM showroom traffic helped some other competitors as well, as consumers cross-shopped brands," Taylor said.

GM, the world's biggest automaker, said June amounted to its best month since September 1986. Paul Ballew, GM's executive director of global market and industry analysis, said the company will announce soon whether it plans to continue the far-reaching discount, which began June 1 and is scheduled to end Tuesday.

The boom was driven by record truck sales, which increased 69 percent. The Chevrolet Silverado full-size pickup led the industry as its sales more than doubled, GM said.

"We see this as an indication that America's desire for trucks and SUVs is still a strong force in the marketplace," GM vice president of marketing Mark LaNeve said.

Ballew said GM attracted roughly 150,000 new customers in June. They typically bought vehicles for an average of $400 to $500 less than they paid in May, he said.

GM sales for the first six months of the year rose 2.7 percent. Its truck sales rose 6.3 percent; car sales fell 2.3 percent.

Ford said its domestic sales fell 2.5 percent in June from a year ago and dropped 4.3 percent for the first six months of the year despite hits like the sporty Mustang and growing sales of its crossover vehicles.

The nation's second-biggest automaker said June sales of the Ford, Lincoln and Mercury brand cars rose 7.7 percent, helped by the Mustang and Ford Five Hundred sedan, but truck sales fell 7.3 percent.

Ford's top sales analyst George Pipas said Ford considered matching GM at the beginning of June but decided to stick with its sales strategy. Ford began offering $1,000 last month to employees who persuaded friends and relatives to buy a Ford. That deal runs through Sept. 30.

Pipas acknowledged GM's program as a huge success but said attracting buyers after the promotion will be more difficult.

"The interesting thing about a clear, compelling message is that it's a clear, compelling message," Pipas said. "Customers know when it's on and when it's off."

Pipas said he believes GM's discount is an attempt to clear out 2005 inventory before the fall and won't escalate into a pricing war between the automakers.

Ballew said the discount significantly cut GM's inventory. He also said the program fits well with GM's desire to get away from incentive spending and focus more on its vehicles' value.

"I don't know if there needs to be an exit strategy because this program provides a nice bridge to what we want to do in '06," Ballew said.

NADA's Taylor said GM could have problems maintaining an adequate supply of vehicles at dealerships if it continues the program into July.

Chrysler's sales were up 1.1 percent in June. The company saw an 11 percent drop in demand for its popular Chrysler 300C sedan, and a 1.5 percent decline in car sales overall. Chrysler's total sales were up 5.2 percent for the first six months of the year.

Chrysler senior vice president of sales Gary Dilts said Chrysler decided to match GM's offer because customers were attracted to its simplicity.

"It's not a bad way to go for the '05 model year," Dilts said.

Toyota reported its best-ever June on a 10 percent sales increase. Toyota's total sales are up 11.6 percent for the year on the strength of car sales, which have jumped 20.1 percent. That includes sales of the gas-electric hybrid Prius, which more than doubled over last June.

"Our fuel-efficient strategy continues to pay dividends," said Toyota Motor Sales USA president Jim Press.

Nissan and Honda also announced their best Junes ever. Nissan's sales increased 14.2 percent, and its year-to-date sales are up 15.5 percent on the strength of its trucks. Honda's sales were up 4.7 percent in June, and its truck sales shot up 20 percent in large part because of its new Ridgeline pickup. Honda's sales are up 1.5 percent for the year to date.

Hyundai said it set an all-time sales record, with truck sales up 35 percent. Hyundai's car sales were down 11.5 percent, but the company's overall sales were up 10.2 percent for the January-June period.

Sales percentages are adjusted for differences in the number of selling days. There were 26 selling days in June 2005 and 25 in June 2004.