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updated: 7/1/2011 11:47 AM

GM, Ford June sales rise as gas prices fall

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  • Volkswagen of America Inc. said Friday its June U.S. sales rose 35.1 percent on strong demand for its Jetta sedan and other models.

      Volkswagen of America Inc. said Friday its June U.S. sales rose 35.1 percent on strong demand for its Jetta sedan and other models.
    Associated Press

 
Associated Press

DEE-ANN DURBIN,AP Auto Writers
TOM KRISHER,AP Auto Writers


DETROIT (AP) -- Falling gas prices brought truck buyers back to Ford and General Motors showrooms last month. Still, pump prices remained high enough that shoppers snapped up smaller cars as well.

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GM sales rose 10 percent in June from a year ago. The Detroit car company said it sold 215,358 cars and trucks last month, up from 195,380 a year ago. Ford sales also rose 10 percent.

The results indicate the auto industry's slow recovery from the recession is back on track after a brief slump in May.

GM said that cheaper gas lured more pickup truck buyers with Chevrolet Silverado sales rising 5 percent and GMC Sierra sales up 8 percent compared with a year earlier. Sales of Ford's F-Series pickups rose 7 percent.

Any jump in pickup sales helps the Detroit automakers, which sell more than five times as many pickups as foreign-based brands.

Still, GM's sales were led by smaller, more fuel-efficient models like the new Chevrolet Cruze compact. Sales of the Cruze more than doubled the sales of the car it replaced, the lackluster Chevrolet Cobalt. Gas prices averaged $3.68 per gallon in June, cheaper than in May but hardly inexpensive.

"There is a certain portion of consumers that react to gas prices almost on a daily basis, and they decide what to buy based on those prices," said Jesse Toprak, vice president of industry trends and insights for car pricing site TrueCar.com.

GM's small-car and crossover sales also got a boost from earthquake-related shortages of Japanese models that persisted through June.

GM is the first major car company to report U.S. sales on Wednesday. Earlier, Volkswagen of America Inc. said its U.S. sales rose 35 percent in June on strong demand for its Jetta midsize sedan and other models. Industry analysts expect overall U.S. sales to rise 13.5 percent from last June.

Even with sales rebounding in June, GM backed off a bit from its sales forecast for the year. Don Johnson, vice president of U.S. sales, said he now expects the total sales to be at the low end of the company's previous prediction of 13 million to 13.5 million vehicles.

Johnson blamed the change on stubbornly high unemployment, which contributed to the decline in May. Total U.S. sales fell 3.7 percent in May after a string of double-digit monthly increases.

Johnson sees the slow recovery continuing through the rest of the year. He said that even with unemployment around 9 percent, 91 percent of the country is still working, and many are driving older cars.

"There are still people out there looking for a vehicle and in many cases need to replace their vehicles," Johnson said.

The average car on the road now is 10.6 years old, according to the Polk research firm.

Johnson also said GM plans to roll out new versions of the Silverado and Sierra pickups next year.

Automakers expect to sell around 1.1 million cars and trucks in June. That's up 5 percent from May, when parts shortages caused by the March earthquake in Japan, $4-per-gallon gas and a lack of deals caused a slump.

But the pace of sales has slowed from the beginning of this year. Like GM, some analysts are starting to question the strength of the recovery. J.D. Power and Associates lowered its full-year sales forecast from 13 million vehicles to 12.9 million, saying the sluggish economy could take a bite out of sales even if car shortages ease by this fall.

Shortages are keeping car prices high, and they will likely stay that way through September, J.D. Power said. In the meantime, hiring has slowed, the unemployment rate is creeping up and incomes are flat. Consumer confidence slipped to a seven-month low in June.

"Things aren't quite as healthy in the current environment as expected earlier this year," said Jeff Schuster, J.D. Power's executive director of global forecasting.

One issue for automakers is the lack of small, fuel-efficient cars on their lots. Japanese automakers expect earthquake-related shortages of popular products like the Toyota Prius and Honda Civic for several more months, and Detroit automakers can't meet the demand for small cars alone. The industry began June with a 30-day supply of compact and subcompact cars, and inventory has only gotten tighter since then, Ford's top U.S. sales analyst George Pipas said. That compares to a 51-day supply of all cars and trucks.

Pipas said that instead of moving into mid-size cars, small-car shoppers are simply waiting. Both Honda Motor Co. and Toyota Motor Corp. have said they expect their North American production to be at near-normal levels by late summer, and more cars will get to dealerships soon after that.

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