Most major automakers showed stronger-than-expected U.S. June sales gains as low interest rates, falling gas prices and still-significant incentives encouraged consumers to set aside concerns about the economy.
Shares of General Motors Inc (GM.N) jumped more than 6 percent as the No.1 U.S. auto maker reported a 16 percent increase in vehicle sales from the previous year and said June was its best performing month since September 2008. Ford Inc's (F.N) sales climbed 7 percent and its shares rose 3 percent.
Of the major automakers that have reported sales so far, only Toyota Motor Corp. (7203.T) missed analysts' expectations. The third-biggest automaker in U.S. sales still managed a 60 percent increase, rebounding from last year's low point after the Japanese earthquake and tsunami.
Auto sales are an early sign of consumer spending and have been one of the bright spots in the U.S. economy this year. Deteriorating European markets have led industry executives to worry about possible contagion spreading to North America. On Monday, data from the Institute for Supply Management showed U.S. manufacturing shrank in June for the first time in nearly three years, a sign of a slowdown in the economic recovery.
Ford chief economist Ellen Hughes-Cromwick said falling gas prices are "acting like a tax cut for consumers (and) helping to boost discretionary incomes for households."
General Motors Co (GM.N) and Ford Motor Co each said that U.S. auto sales are on pace to top 14 million vehicles on a seasonally adjusted annualized basis. This would be a rebound from a disappointing May, when the annual pace was around 13.7 million.
On average, analysts surveyed by Reuters expected a 13.9 million annualized sales rate in June.
GM said its vehicle sales in June totaled 248,750. All four of GM's U.S. brands - Buick, Cadillac, Chevrolet and GMC -- showed sales increases for the month.
Michelle Krebs, senior analyst with Edmunds.com, on Tuesday said sales were underpinned by pent-up demand. She said buyers were encouraged by low interest rates, merchandising promotions such as zero-interest loan offers and incentives that cut selling prices.
Ford U.S. sales chief Ken Czubay said sales markedly gained strength in the last week to 10 days of the month. He said those sales will not detract from July's figures.
Ford (F.N) sales climbed to 207,759 vehicles, according to the automaker, with strong sales of sedans, utility vehicles and pickup trucks.
Chrysler sales rose 20 percent to 144,811 vehicles, the company said on Tuesday, slightly topping analyst expectations.
It was the 27th consecutive month that Chrysler sales topped those from the previous year, and its best June sales since 2007.
GM is the No. 1 automaker in new-car sales, Ford is No. 2 and Chrysler is No. 4.
Nissan, which is No. 6, showed a 28-percent sales gain, to 92,237 new vehicles. The Nissan brand had record June sales of 81,801, up 25 percent, while the luxury Infiniti brand showed a 66-percent sales rise to 10,436.
J.D. Power and Associates and LMC Automotive expect a 20-percent gain in U.S. auto sales for June.
The Chrysler brand of vehicles showed a 63-percent gain in sales, followed by its Jeep brand at a 23-percent gain, Ram truck up 12 percent and the Dodge brand up only 2 percent, Chrysler said.
The No. 5 automaker in U.S. sales, Honda Motor Co (7267.T) reports June sales later on Tuesday. Analysts expect it to show nearly a 50-percent improvement over year-ago numbers, which were weak due to the March earthquake in Japan.
(Reporting By Ben Klayman and Bernie Woodall in Detroit; Editing by Gerald E. McCormick, Maureen Bavdek, Sofina Mirza-Reid and Andrew Hay)