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GM, Chrysler Sees June U.S. Auto Sales Beating Estimates

General Motors Co. (GM), Ford Motor Co. and Chrysler Group LLC reported U.S. auto sales for June that topped analysts’ estimates, helping the industry surpass projections and stay on pace for the best year since 2007.

U.S. auto sales accelerated to a 14.1 million seasonally adjusted annualized rate, researcher Autodata Corp. said in an e-mailed statement. The pace topped the 13.8 million light- vehicle rate that was the average estimate of 15 analysts surveyed by Bloomberg.

Auto-industry sales provide a bright spot in the U.S. economy that has been hindered by persistent unemployment and weakening consumer confidence. Analysts under-estimated demand for most automakers’ vehicles after May sales came in lower than projected. Higher sales to fleet customers bolstered sales in June as did holiday promotions that attracted consumers.

“A lot of analysts -- ourselves included -- were cautious going into June with the unemployment rate inching up, consumer confidence dropping and the volatility going on in Europe,” Alec Gutierrez, an analyst at Kelley Blue Book in Irvine, California, said in a telephone interview. “It’s just a testament to the strength of consumer demand for new vehicles despite all the negative news out there.”

GM sales climbed 16 percent last month, beating the 7.6 percent increase that was the average estimate of 11 analysts surveyed by Bloomberg. Deliveries rose 20 percent for Chrysler and 7.1 percent for Ford, topping analysts’ average estimates for gains of 18 percent and 3.7 percent, respectively. Nissan Motor Co. (7201) sales rose 28 percent, exceeding the 21 percent average estimate.

Economic Disconnect

The U.S. auto industry has zoomed back since 2009 when GM and Chrysler restructured in government-backed bankruptcies, threatening the viability of suppliers and thousands of jobs. Light-vehicle sales this year may reach 14.3 million, the average of 16 analysts’ estimates, which would be 38 percent more than the 10.4 million total in 2009.

“There’s a little bit of disconnect between what we’re seeing in the economy and what we’re seeing in the auto industry,” Rebecca Lindland, an analyst at IHS Automotive, said in a telephone interview. “For the average consumer in middle America, they don’t really care what the euro is doing. If they need a car, they’re not thinking whether Greece is going to exit the euro zone from their Chevy dealership.”

Toyota, Honda

Toyota Motor Corp. (7203) and Honda Motor Co. led the industry with June sales gains of 60 percent and 49 percent, respectively. The Japan-based automakers missed eight analysts’ average estimate for increases of 66 percent and 51 percent.

Marketing campaigns tied to tomorrow’s U.S. Independence Day holiday helped boost sales in the last week of the month, said Ken Czubay, Ford (F)’s U.S. sales chief.

“We definitely saw an improvement in the last seven, eight, nine days,” Czubay said today on a conference call. “It’s always been a good time to buy around the Fourth of July. I think ourselves and our competitors came out, causing a good stir in the marketplace.” Incentive spending was down slightly from May, he said, adding that new models helped attract buyers.

Ford said sales of the Escape sport-utility vehicle climbed 28 percent to 28,500, while deliveries of the Fusion sedan rose 17 percent to 24,433, according to a statement. Deliveries of the Malibu sedan, which GM redesigned earlier this year, increased 32 percent to 31,402, the Detroit-based company said in a statement.

GM rose 5.6 percent, the biggest gain since Feb. 16, to $20.67 at the close. Ford advanced 2.2 percent to $9.60.

GM Pickups

GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.

“They’re likely going to have a relatively high days supply of trucks moving forward and they’re already placing some pretty aggressive cash incentives on the hood,” Kelley Blue Book’s Gutierrez said. “It’s going to eat into their profit margins, but if you have to place a $3,000 or $5,000 incentive in their portfolio, you want it to be on full-size pickups, because those have the highest margin overall.”

Analysts at Citigroup Inc. and Deutsche Bank AG lowered estimates for auto demand in 2013 by 500,000 car and light-truck sales after May’s sales results. Citigroup’s Itay Michaeli lowered his outlook to 14.5 million sales, from 15 million. Deutsche Bank’s Rod Lache cut his estimate to 14.2 million, from 14.7 million.

Analysts ‘Overreact’

Analysts “tend to overreact to change in both directions,” said Alan Baum, principal of Baum & Associates in West Bloomfield, Michigan, who estimated a 14 million industry sales pace for June. “The overall trends affecting car buyers have been pretty consistent. I just don’t see changes in underlying numbers to say ‘Oh my, last month was bad, things are just falling apart.”’

Chrysler deliveries climbed to 144,811 cars and light trucks from 120,394 a year earlier. The Auburn Hills, Michigan- based company controlled by Fiat SpA (F) set records for the Fiat 500 small car and Jeep Wrangler sport-utility vehicle in June. Sales of the 500 more than doubled to 4,004 and sales of the Wrangler surged 28 percent to 14,461.

Hyundai, Kia

South Korean automakers Hyundai (005380) Motor Co. and Kia (000270) Motors Corp. joined Chrysler in reporting smaller June sales gains than they recorded earlier this year. Hyundai and Kia combined to sell 10 percent more vehicles in June than a year earlier, exceeding the 9.8 percent increase that was the average of six analysts’ estimates.

Chrysler deliveries climbed 33 percent through the first five months of the year, according to Woodcliff Lake, New Jersey-based Autodata. Hyundai and Kia, both based in Seoul, combined to increase sales by 14 percent this year through May, said the researcher.

Volkswagen AG (VOW), on pace to exceed its target for selling more than 500,000 vehicles in the U.S. this year, increased combined sales of its Volkswagen and Audi brand vehicles by 32 percent in June, beating the 28 percent gain that was the average estimate of four analysts. The company delivered 10,252 Passat and 2,914 Beetle cars after registering just two sales for each of the models a year earlier.

Confidence among U.S. consumers dropped for a fourth month to 62 for June, the lowest since January, the Conference Board’s index showed June 26. Labor Department figures this week may show employers increased payrolls by 90,000 workers last month, the median forecast of 59 economists surveyed by Bloomberg News, completing the weakest quarter for employment in two years.

‘Conflicting’ Data

“There is a lot of conflicting economic data out there -- consumer sentiment somewhat negative, jobs somewhat negative -- however we are seeing some decent results in housing, fuel prices are down and the availability of consumer credit is positive,” Kurt McNeil, U.S. vice president of sales operations, said today on GM’s conference call. “We still see headwinds but at the end of the day we’re calling for moderate, gradual economic growth.”

A 22 percent rise in June light-vehicle deliveries to 1.29 million vehicles, which topped 10 analysts’ average estimate of 1.27 million, was skewed by comparisons with year-earlier vehicle shortages for Toyota and Honda, which lost production after Japan’s March 2011 earthquake and tsunami. The June 2011 sales rate was 11.6 million, according to Autodata.

“Economic fundamentals have remained on the soft side as compared to the first quarter,” Ellen Hughes-Cromwick, Ford’s chief economist, said today on the company’s conference call. “Job growth has really been tepid.”

Fleet Deliveries

GM sales to fleet customers, such as governments and rental-car companies, rose 36 percent last month, making up 32 percent of the company’s sales. Ford said its fleet sales accounted for 35 percent of its deliveries, down from 37 percent a year earlier.

Chrysler dealers took first deliveries in June of the Dodge Dart compact sedan, which Chief Executive Officer Sergio Marchionne has called the most important new model introduction to the company since Fiat took control in 2009. The company sold 202 Darts in June, according to its statement.

“We’re still in the ramp-up stage on the Dart and 60 days away from really hitting the groove,” Reid Bigland, Chrysler’s head of U.S. sales, said June 28. “The Dart fills objectively the biggest hole in our product portfolio.”

To contact the reporter on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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