June Auto Sales Outpace Views

Automakers outpaced dampened expectations for June sales, as crossovers and pickup trucks continued to fuel demand.

Industry watchers were bracing for a slowdown in the U.S. following a torrid May that marked the strongest sales pace since before the 2008 recession. Kelley Blue Book and Edmunds.com both forecasted a seasonally adjusted annual rate of 16.3 million.

But according to Autodata, industry-wide sales checked in with a SAAR of 16.98 million vehicles, well ahead of the 15.8 million recorded a year earlier and May’s annualized rate of 16.7 million.

Sales were expected to broadly decline compared to June 2013, since the latest month had two fewer selling days. Instead, total deliveries improved 1.2% year-over-year, although sales were down 11.7% versus May.

General Motors (NYSE:GM) continued to show few signs of a pullback after a spate of recalls this year. The nation’s top seller of cars and trucks said Tuesday its June sales rose 0.7% to 267,461 vehicles, well ahead of Kelley Blue Book’s projection for a 3.7% drop.

Retail sales, or vehicles sold by dealers to consumers, were up 1%, while fleet sales improved 2%.

GM benefited from strong sales at its luxury brands. Buick sales grew 18.4%, and Cadillac ticked 0.1% higher. GMC gained 10.6% on a sharp increase in Yukon sales.

Chevrolet sold 2.5% fewer vehicles. The redesigned Silverado pickup rose just 0.6%, and sales of the Cruze compact car slipped 20.9%. In the final week of June, GM ordered dealers to stop delivery of certain 2013 and 2014 versions of the Cruze to resolve an airbag issue.

On the positive side, the new Corvette Stingray helped sales of the sports car more than triple. Chevrolet also saw a big jump in sales of its Tahoe and Suburban large SUVs.

Kurt McNeil, GM’s U.S. vice president of sales operations, noted that every brand recorded higher sales when adjusted for the lost selling days.

After recalling another 7.55 million vehicles in the U.S. on Monday, GM said it plans to take a second-quarter charge of $1.2 billion to cover repair costs. The six recalls, which marked the conclusion of an enhanced safety review, include 7.35 million cars that are being called back for inadvertent ignition key rotation.

Earlier this year, Detroit-based GM began to call back 2.6 million vehicles worldwide to replace defective ignition switches and cylinders. The recall has attracted scrutiny from Congress and the Department of Justice, given revelations that GM engineers knew of the issue in 2004. GM initiated its safety review following the ignition-switch recall.

Despite GM’s recall woes, “consumers have been able to look past the issues,” said Alec Gutierrez, senior analyst at Kelley Blue Book. “Consumers see it as proactive.”

He added that recalls typically do not weigh on sales of new vehicles. When Toyota (NYSE:TM) pulled millions of cars for unintended acceleration, sales took a hit only when the company issued voluntary stop-delivery orders on certain models. Volume picked back up once the orders were lifted.

GM shares were trading 3.3% higher at $37.49 in recent trading.

Chrysler Group logged a stronger sales gain compared to its Big Three rivals. The automaker sold a total of 171,086 vehicles, up 9.2% over the year-ago month amid strong truck demand.

Auburn Hills, Mich.-based Chrysler easily beat expectations. Kelley Blue Book projected a 2.1% improvement in total sales. Edmunds was looking for growth of 6.3%.

The addition of the Cherokee SUV helped Jeep post a 28% gain. Chrysler’s Ram Truck brand recorded a 14% increase in sales. The namesake Chrysler brand saw its sales fall 12%. More than 5,000 units of the new Chrysler 200 were sold during the month. Sales at Dodge and Fiat were up 1% and 11%, respectively.

Total car sales dropped 19%. Truck sales jumped 77% and accounted for 77% of Chrysler’s June sales.

Chrysler, which is expected to formally merge into Fiat Chrysler Automobiles this year, said its sales figures marked the best June since 2007.

On Monday, Chrysler expanded a recall of 196,000 SUVs and minivans to fix ignition switches that may inadvertently turn keys out of the “run” position, similar to the problem that has plagued GM. The latest recall from Chrysler covers another 695,957 vehicles.

Ford Motor Co.’s (NYSE:F) sales fell 5.8% last month, as fewer F-series pickup trucks made their way to dealers.

The No. 2 U.S. automaker sold 222,064 vehicles. Truck sales were down 8.6%, while cars fared better with a decline of 1.4%. Utilities slid 7.5% year-over-year.

Ford still managed to say ahead of expectations. Kelley Blue Book anticipated a 7.2% drop in overall sales. Edmunds estimated a decline of 6.5%.

Ford has gained a reputation for holding back incentives, potentially sacrificing market share in exchange for healthier profit margins. During a conference call with analysts and reporters, Ford said the average transaction price for the entire pickup truck segment climbed $3,300 in June.

F-series trucks are “tracking to our inventory plan with the lowest incentives among the major players in the segment,” said John Felice, Ford’s vice president of U.S. marketing, sales and service.

Gutierrez said Ford could lag behind its rivals in sales volume as it continues to hold the line on incentives, particularly in the market for full-size trucks.

The Dearborn, Mich.-based manufacturer plans to temporarily stop production this summer at two truck plants that need to be revamped for the new F-150, which will feature a body made of aluminum. Ahead of the switchover, Ford is stockpiling 2014 models and keeping incentives in check to maintain sufficient supplies of its pickups.

Sales of F-series trucks sank 11% to 60,560 in June. The Ford brand booked sales of 214,793 units, down 5.9%. Lincoln sales fell 2.7% to 7,271.

Ford shares edged six cents lower to $17.18.

Toyota (NYSE:TM), which led all automakers in global sales last year, said its June sales in the U.S. rose 3.3% to 201,714 units, beating estimates. The Camry sedan posted sales growth of more than 13%, and the all-new Corolla climbed 17%.

Toyota shares rallied 2.1% to $122.18.

Honda (NYSE:HMC) shares rose 0.7% to $35.25 after reporting June sales that fell 5.8% to 129,023 units. Analysts expected a steeper decline.

Sales at Acura were down 18.6%. The Honda brand recorded better sales of the Accord and Civic, but deliveries fell 4.3% overall.

“Despite an easing of the pace in June, the larger sales trend throughout the industry remains robust,” said Jeff Conrad, senior vice president and general manager of the Honda division.

Volkswagen Group, which includes its namesake brand and Audi, delivered 45,694 vehicles last month. That reflects a 9.8% drop year-over-year, but sales came in stronger than expected. Edmunds expected total sales to drop 15.8%.

Audi helped make up for continued weakness for Volkswagen sales. The luxury brand sold 16,867 vehicles, up 23.1%.

Nissan Group set a company record with June sales of 109,643 vehicles, an increase of 5.3%. Nissan improved 6.4% to offset a 5.9% decline in Infiniti sales. The results topped projections from Kelley Blue Book and Edmunds.

Hyundai and Kia bucked estimates for a decline, combining to sell 118,051 vehicles for a 2.2% improvement year-over-year. Hyundai sales grew 4%, while Kia was up slightly. Both brands recorded their best first-half U.S. sales ever.