Automakers posted one of the best months in years for auto sales in July, with General Motors, Ford, Chrysler, Toyota and Nissan all reporting big gains.
New vehicle sales rose 9 percent to 1.4 million from the same month a year ago, according to Autodata Corp..
General Motors Co. said it sold 256,160 vehicles in the U.S. last month, a 9 percent increase from a year ago. It was GM's best July sales total since 2007.
"American families feel better about the economy than they have in a long time," Kurt McNeil, GM's U.S. sales chief, said Friday.
Ford Motor Co. said its sales rose 10 percent to 212,236 vehicles in July, its best July in eight years. Chrysler Group reported U.S. sales of 167,667 units, a 20 percent jump from the same month a year earlier and its best July since 2005.
Toyota Motor Corp. said its U.S. sales rose nearly 12 percent in July to 215,802 vehicles. Bill Fay, Toyota division group vice president and general manager, attributed the gain to "rising consumer confidence."
Honda bucked the trend. Its U.S. sales fell 3.9 percent in July to 135,908 vehicles.
Nissan said it posted U.S. sales of 121,452 vehicles, an 11 percent rise and a July record. Hyundai also logged its best July ever, selling 67,011 vehicles, almost a 2 percent increase.
Bigger discounts and sales incentive programs, continued low interest rates and job growth are fueling robust car sales.
The Labor Department reported Friday that employers added 209,000 positions to their payrolls in July. That brought the total so far this year to 1.6 million, one of the best periods for sustained growth in employment since the recession.
The housing market also is on an upswing, becoming both a source of jobs and lending the confidence that people need to be comfortable with big-ticket car purchases, economists said.
Consumer confidence is at its highest level since the recession, said Lacey Plache, the economist at car shopping company Edmunds.com.
Another reason sales are rising is that younger buyers are returning to the market.
Generation Y consumers -- those born 1977-1994 -- accounted for 26 percent of new-vehicle retail sales during the first half of this year, up from 24 percent during the first half of last year, according to J.D. Power & Associates, the auto industry market research firm.
That put the cohort ahead of Generation X -- those born 1965-1976 -- for the first time, J.D. Power reported. Generation X buyers accounted for 24 percent of new car retail sales in the same period. But baby boomers -- born 1946-1964 -- are still the largest group of buyers of new vehicles, accounting for 38 percent of sales during the first half of the year.
"As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing," said Thomas King, a J.D. Power vice president.
Some analysts are asking how much momentum is left to fuel rising auto sales.
Morgan Stanley analyst Adam Jonas said the industry is hovering at a "cyclical peak" and that it might be time for investors to start selling auto industry stocks.
"The U.S. auto cycle has clearly moved from a 'need to buy' to a 'I just want to buy' type of consumer mindset," Jonas said. "Forgive our contrarian instincts if this alignment of factors makes us want to head in the opposite direction."
Automakers are gaining business now at the expense of future sales, he said. They are doing that through what Jonas calls "low monthly payment math."
Through the end of July, auto loans written this year averaged more than 66 months -- a record -- and loans of 84 months or more now account for more than 5 percent of car loans, also a record, according to J.D. Power.
"You can't underestimate how important dealer financing has been to this automotive recovery," said Jessica Caldwell, an analyst at Edmunds.com. "It's attractive enough when a dealer offers zero percent APR, but now it's more common to see 0 percent for as many as 72 months, which was virtually unheard of not too long ago."
Business on 08/02/2014