Some Optimism for US Auto Market with June 2009 Sales

After a yearlong free fall in the American car market, sales declines slow in June

DETROIT July 1, 2009; Tom Krisher writinfg for the AP reported that after a yearlong free fall in the American car market, the decline of sales slowed in June, offering hope to automakers that the bottom has been reached and more shoppers may slowly start returning to showrooms soon.

Still, sales were down 7.1 percent from May, which generally is a stronger sales month.

Overall, automakers sold 859,847 vehicles in June, a 28 percent drop from the same month last year, according to Autodata Corp.

Sales declines slowed for four of the six major carmakers, with Ford Motor Co. reporting the smallest drop of 10.7 percent. For many months, Ford and other companies have been reporting year-over-year declines of 40 percent or more.

Even Chrysler, which emerged from bankruptcy protection early in June, saw its decline shrink.

Analysts say that's among the signs that the auto industry's slump that began with $4 per gallon gasoline last summer could be leveling off.

"It is unlikely things will get any worse," said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.

The slowly improving economy and government incentives of up to $4,500 to trade in inefficient clunkers for new vehicles could lead to modest improvements in the second half of the year, he said.

In anticipation of heightened traffic at dealers and higher sales later this year, Ford has increased its production order by 25,000 vehicles for the third quarter.

"We're making steady progress," Jim Farley, Ford's vice president of marketing, said in a statement. "We remain grounded, however, given challenging industry and economic conditions."

And while Chrysler's sales results were dismal -- only 68,297 cars and trucks, many sold due to incentives of more than $4,800 per car -- that's about what analysts expected.

"At a time when they are emerging from bankruptcy and trying to reinvent themselves, it is not a huge surprise," Toprak said.

Affordability and rising gas prices -- from $2.28 per gallon in May to $2.64 in June -- boosted sales of sales of compact cars, some hybrids and larger crossover vehicles, which have the seating and cargo space of a sport utility but are built on car underpinnings so they are more efficient and maneuverable.

For instance, GM's Buick Enclave, which seats eight, saw sales rise 26 percent, and Honda's Pilot had a 12 percent increase even in a declining market.

Sales of fuel-efficient hybrid vehicles that run on gasoline and electricity were mixed. Toyota's Prius, the top-selling hybrid, saw a 10.5 percent increase, but Honda's Civic hybrid dropped 42 percent as the company introduced a new low-cost hybrid called the Insight.

Ford's brand-new Fusion midsize car posted a big sales increase of 26 percent. The revamped 2010 model also has a hybrid version.

At General Motors Corp., sales slid 33.4 percent despite incentives and discounts on its Pontiac brand, while Toyota Motor Corp. sales were off 32 percent. Honda Motor Co. saw a 30 percent decline because of extremely strong small-car sales last June when gasoline was above $4 per gallon. Nissan Motor Co. reported a narrower decline than in previous months, down only 23 percent.

GM's decline improved when compared with previous months even though it entered Chapter 11 bankruptcy protection on June 1. GM plans to sell or close Pontiac, Saturn, Hummer and Saab to focus on four core brands -- Chevrolet, Cadillac, GMC and Buick.

Analysts had speculated that June sales, when adjusted for seasonal variances and multiplied to calculate an annual selling rate, would exceed 10 million for the first time this year. But sales once again fell just shy of that mark at 9.7 million for June. That's a huge reduction from more than 16 million as recently as 2007.

June sales were helped by fire-sale prices at 789 Chrysler dealers that were fired by the company told to get rid of their inventory by June 9. Also, with GM dropping its Pontiac brand, incentives rose on those models.

Ford beat Toyota for the third straight month to retain its long-held title of the No. 2 U.S. automaker. Ford sold 154,873 vehicles in June to Toyota's 131,654. GM is No. 1 in sales.

Toyota's top-selling Camry midsize sedan saw sales fall 37 percent while Corolla compact sales plunged 53 percent.

One bright spot for Toyota was its recently released third-generation Prius, which saw sales rise 10 percent. Prius sales had suffered in recent months as gas prices plunged from more than $4 per gallon last summer to below $2 a gallon in the winter.

Nissan's decline narrowed despite weaker sales of its top-selling Altima midsize sedan. The automaker sold 2,137 units of its boxy Nissan Cube in its first month of sales.

Dearborn, Mich.-based Ford sold 154,873 cars and light trucks last month, with strength in its midsize Fusion and the Flex crossover vehicle. That was still less than the 161,197 sold in May, traditionally a stronger sales month than June.

Ford is the sole U.S. automaker to avoid bankruptcy protection and is not receiving government loans. GM and Chrysler are receiving billions in loans, and GM inching its way closer to emerging from Chapter 11.

AP Auto Writers Kimberly S. Johnson in Detroit, Stephen Manning in Washington and Dan Strumpf in New York contributed to this report.