GM joins Ford topping sales estimates to drive industry surprise
07/01/2014 7:22 PM
07/01/2014 7:23 PM
General Motors surprised investors with a U.S. sales gain in June after analysts projected a decline. Ford, Chrysler and Nissan beat estimates in the industry’s best month since July 2006.
The rate of sales, adjusted for seasonal trends, jumped to 16.98 million, the fastest in almost eight years, according to researcher Autodata. Light vehicle sales in the U.S. last month rose 1.2 percent to 1.42 million vehicles. That exceeded the average analyst estimates for a 16.3 million rate on 1.37 million sales. GM’s sales rose 1 percent, beating the average analysts’ estimates for a 6.3 percent decline last month, even as its vehicle recalls rose to a U.S. record.
“General Motors is amazingly resilient,” said Michelle Krebs, a senior analyst at AutoTrader.com. “Consumers recognize that the products GM is offering now aren’t the same as the recalled models. If you look at what’s selling, it’s the new stuff that’s doing really well.”
GM, trying to grapple with a recall crisis that erupted in February, faced a difficult June. The company released a report on an internal investigation that found a lack of urgency in the engineering and legal departments led the automaker to take more than a decade to recall flawed 2.59 million Chevy Cobalts and other small cars linked to at least 13 deaths.
Chief Executive Officer Mary Barra returned to Congress last month for additional testimony on the matter and the company continued its stepped-up pace of recalls with the total reaching almost 29 million vehicles in North America. The company’s shares rose 3.6 percent to close at $37.59 on Tuesday, the highest in almost four months.
While struggling with troubled products dating back more than a decade, GM’s newly designed vehicles drove sales last month to a total of 267,461 vehicles. Buick brand sales rose 18 percent, led by deliveries of the new Encore small SUV, for its best June since 2006. Chevrolet Tahoe SUV sales almost doubled while Cadillac Escalade deliveries increased 84 percent and Chevy Suburban rose 73 percent.
The new models are helping GM take advantage of an improving auto market. Aided by available credit and a strengthening economy with housing starts that remained near the 1 million mark in May, U.S. auto sales are headed for the biggest year since 16.15 million vehicles were sold in 2007.
Chrysler’s deliveries rose 9.2 percent in June, the company’s 51st consecutive monthly increase, while Ford’s light-vehicle sales decreased 5.8 percent, less than analysts’ estimates that projected a 6.6 percent decline. Toyota’s sales trailed analysts estimates.
For the last two months, industrywide auto sales have been running at an annualized rate of 17 million, including medium and heavy trucks, John Felice, Ford’s U.S. sales chief, said Tuesday on a call with analysts and reporters.
“It was a really solid run rate the past two months for the industry,” Felice said. “We expect that to continue, especially into the first part of July with the promotional push by the industry” around the U.S. Independence Day holiday on July 4.
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