Tags: chrysler | Auto | car | Sales

Chrysler Sales Rise 20%, Topping Expectations

Tuesday, 03 July 2012 09:10 AM

From the tiny Fiat 500 to the Ram pickup truck, sales of Chrysler vehicles charged higher in June, despite concerns that buyers would be turned off by slower hiring.

Chrysler U.S. sales rose 20 percent — its best June in five years — thanks to demand across its lineup.

The industry overall is expecting growth of 20 percent over June of last year. While the pace of sales is expected to cool somewhat from the start of the year, underlying demand remains strong. New models like the Ford Escape and Dodge Dart — which both arrived in dealerships last month — should draw out buyers.

Meanwhile, Volkswagen's sales rose 34 percent on strong demand for two recently redesigned cars: the Beetle and the Passat. Volkswagen is on track to have its best year in the U.S. since 1973 thanks to a cheaper, revamped lineup.

Demand for Chrysler's Ram pickup — its best-seller — increased 12 percent over a year earlier as home building perked up. Cars saw even bigger increases. Sales of the Fiat 500 and the Chrysler 300 large sedan more than doubled from a year ago. And Chrysler sold 200 compact Darts last month.

Earlier this spring, sales were on track to reach 14.5 million this year. The pace dropped to 13.8 million in May and most analysts expected it to stay below 14 million in June.

But so far, carmakers aren't panicking. Chrysler predicted a rate of 14.4 million for June.

"Although this softer sales rate may persist over the next few months, we believe that 2012, like 2011, will finish out strongly," Barclays analyst Brian Johnson wrote in a recent note to investors.

Sales in the first four months of this year were boosted by mild weather and the post-earthquake return of Japanese inventories. But since then, the economic picture has gotten cloudier. In June, employers scaled back hiring and manufacturing shrank for the first time in nearly three years. Consumer confidence — which needs to be strong for buyers to invest in new cars — fell for the fourth straight month.

The news isn't all worrisome. If sales come in at 13.8 million for the year, they would still be stronger than the 12.8 million in 2011. And they'd be much stronger than the 30-year low of 10.4 million during the recession in 2009.

There continues to be a lot of demand from buyers who bought cars in the middle of the last decade and need to replace them. Annual sales hit a high of 17 million in 2005, and those cars are now seven years old.

Low interest rates and better credit availability could also lure buyers. The average interest rate on a 60-month new-car loan is now 4.5 percent, down from 6.98 percent two years ago, according to Bankrate.com.

"The affordability of cars is probably at an all-time high," Chrysler Group sales chief Reid Bigland said last week.

Other automakers reporting Tuesday:

— Nissan Motor Co. said its sales were up 28 percent. Nissan's Infiniti luxury brand was up 66 percent thanks to the new Infiniti JX crossover.

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Tuesday, 03 July 2012 09:10 AM
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