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Strong June seen for auto sales; Chrysler up 8 pct

Published: Tuesday, July 2, 2013 8:33 a.m. CDT

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DETROIT – Sales from the major automakers are expected to show that confident U.S. buyers snapped up new cars and trucks at a strong pace in June.

Chrysler said Tuesday that its sales rose 8 percent for its best June since 2007. Ram brand sales rose 23 percent and Dodge sales were up 12 percent on the strength of the Dodge Dart small car.

The major car companies report June results throughout Tuesday.

Analysts don't see much that could slow the sales momentum of the first six months.

The things that juiced sales – low interest rates, wider credit availability, rising home construction and hot new vehicles – aren't going away anytime soon. And so far, hiccups in the stock market, higher taxes and fluctuating gas prices haven't dampened demand.

"I think the fundamentals for continued growth in the new vehicle sales industry are intact," Chrysler's U.S. sales chief, Reid Bigland, said at an industry event last week.

Analyst estimate that U.S. auto sales rose 6 to 8 percent in June, compared with the same month last year. The auto pricing site TrueCar.com predicts that dealers sold cars and trucks at an annualized rate of 15.7 million last month, the best rate since December of 2007.

Sales of pickup trucks – which have been selling at a rate three times faster than the rest of the industry – continued at a strong pace in June. Chrysler Group sold nearly 30,000 full-size Ram pickups in June, up 24 percent from last June. Small businesses have been replacing their aging trucks as home construction picks up.

Young graduates may have contributed to a rise in small car sales, said Kelley Blue Book analyst Alec Gutierrez said. Gas prices, which averaged $3.60 per gallon nationwide in June and were higher than a year ago, also may have caused some buyers to look for more fuel-efficient models, he said.

Consumer confidence hit a six-year high in June. And the Standard & Poor's 500 index had its best first half since 1998, up 12.6 percent, although there was some volatility late last month. At the same time, auto loan rates remained near historic lows in June, with the interest rate on a four-year new car loan averaging 2.7 percent, according to Bankrate.com.

The rate could start rising – slowly – by the end of this year. Federal Reserve Chairman Ben Bernanke said last month that the Fed may start to slow a bond-buying program that has suppressed long-term interest rates.

Bernanke's comments didn't impact June sales, analysts said. It often takes buyers six months or more to research and buy a new car, and a stray comment usually isn't enough to sway them. But if the Fed acts as planned, buyers worried about higher interest rates could rush to buy at the end of this year.

Chrysler, majority-owned by Fiat SpA of Italy, did have some weak spots. Jeep sales were flat as the company halted production of the Liberty to get ready for the launch of the new Jeep Cherokee in August. Jeep sales may also have been impacted by Chrysler's public flap with the government last month over the safety of some older-model Jeeps. And sales for the Chrysler and Fiat brands both rose 1 percent.

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