June auto sales likely to show revival signs

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Detroit : Major automakers are expected to report the highest sales rate of 2009 when they post results for June, as deep discounts limit industry-wide results to a 30% decline.

In the context of the US auto industry, where sales have been slumping for four years, that would constitute good news and support the view sales are near bottom after a punishing decline to nearly 30-year lows, analysts and executives said.

All of the largest automakers are expected to post deep US light vehicle sales declines for June to round out what has been the weakest market since the early 1980s.

“We continue to believe that US auto sales have bottomed this cycle and are heartened by seemingly strengthening retail sales even ahead of any impact from ‘cash for clunkers’ ... “ JP Morgan analyst Himanshu Patel said in a note to clients.

Ford Motor Co expects to report sales declines in the 10% to 20% range in June, which would be the best result of the top six selling automakers in the United States, following on a recent trend of outperforming sales for Ford. Analysts and Ford see the industry as likely posting a sales decline in the 25% to 30% range for June from a year earlier. On an annualized basis, the rate could top 10 million units, the strongest total since December. Edmunds expects Chrysler sales to drop 29.1%, General Motors Corp 28.9%, Honda Motor Co Ltd 31.4%, Toyota Motor Corp 28.7% and Nissan Motor Co Ltd 24.2%.

GM’s bankruptcy filing on June 1, inventory sell-offs from Chrysler dealerships that were losing franchises early in June, and the completion of the sale of Chrysler assets to a group led by Italy’s Fiat SpA all may have distorted the results for the month to some extent, analysts said.

“June industry sales of light vehicles appear to have improved somewhat further versus last month’s levels, benefiting from some recovery in consumer confidence but also from the large discounts offered by Chrysler and terminated GM brands in order to liquidate inventories,” Barclays Capital analyst Brian Johnson said in a note to clients on Monday.