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U.S. June Auto Sales May Hit Strongest Rate This Year (Update1)

By Jeff Green

June 25 (Bloomberg) -- General Motors Corp., Toyota Motor Corp., Ford Motor Co. and other automakers may report a U.S. sales rate for June that exceeds 10 million units for the first time this year, according to four industry estimates.

A 10 million-unit rate is an increase from 9.9 million in May, separate reports from Edmunds.com; J.D. Power & Associates, CSM Worldwide and Deutsche Bank show. The so-called seasonally adjusted annualized sales rate last exceeded 10 million in December. U.S. sales fell to 13.2 million in 2008 after averaging about 16 million a year for a decade.

“The SAAR is finally back in double-digits,” Jesse Toprak, executive director of industry analysis for Edmunds.com in Santa Monica, California, said in a statement today. “We’re still a long way from 16 million unit sales, but things are moving in the right direction.”

GM and Chrysler LLC, reorganizing under separate Obama administration-backed bankruptcies, are counting on improving U.S. sales to help increase revenue and return to profit. Slowing U.S. auto sales have prompted GM, Chrysler, Ford, Toyota and competitors to cut North American production, adding financial pressure on parts suppliers.

Auto sales fell to their lowest rates since the early 1980s in the first quarter of this year as the U.S. economy suffered through the biggest slowdown since the Great Depression. More than 20 auto parts suppliers have been forced into court protection this year as sales dried up, the Original Equipment Suppliers Association trade group says.

June Sales

GM said it expects to be able to break even in a 10 million-unit U.S. market once cost-cutting required as part of its bankruptcy reorganization is completed.

J.D. Power, based in Westlake Village, New Jersey, estimated the June SAAR at 10.1 million in a report today. The June sales rate may rise to 10.2 million and average 11 million units in the second half of this year, Deutsche Bank analyst Rod Lache wrote in a June 23 report. Northville, Michigan-based CSM is estimating a 10.3 million rate for June.

The June sales rate would still trail June 2008, when automakers reported a 13.6 million SAAR.

Ford’s June auto sales are performing better than May’s, Mark Fields, president of the Americas, told reporters June 11. Ford sales fell 24 percent in May.

“June’s sales are off to an encouraging start for us and for the industry,” Fields told reporters at the introduction of the redesigned Taurus at the automaker’s headquarters in Dearborn, Michigan.

‘Tempered’ Recovery

GM Chief Executive Officer Fritz Henderson said June 16 that the largest U.S. automaker expects incremental improvement in U.S. auto sales this month. GM North American President Troy Clarke said in a June 19 Web chat that this month may be the automaker’s best for retail customers in 2009.

“Since March of this year, we have seen small improvements in sales on a monthly basis,” Chief Executive Officer Fritz Henderson told reporters in an Internet chat, without giving a figure. “June looks like a similar trend.”

The June sales rate represents a “tempered but continued recovery in the market,” J.D. Power said in its report, culled from data provided by more than 10,000 auto dealers based on the first 17 selling days of the month.

The combined U.S. market share for Chrysler, Ford and GM should rise to 47 percent in June from 46.5 percent in May, Edmunds.com said. The consumer data gathering Web site still predicts all the major U.S. automakers will say sales fell in June from the same month a year ago, just at a slower rate than in recent months.

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

Last Updated: June 25, 2009 15:48 EDT

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