U.S. Auto sales through June were up 1.5% to 8.65 million, eclipsing last year’s record for the first half of the year of 8.5 million, according Autodata Corp.
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Although sales are back on pace to break last year’s record, there are still signs that the auto sector’s momentum might finally be flagging. Sales are not increasing over the previous year’s levels by as much as they were at this time in 2015.
After six straight years of growth and record sales of 17.5 million last year, U.S. sales are beginning to plateau. In the first six months of last year, for example, sales were up 4%, or more than double the pace of this year. Low gas prices, low interest rates, enticing new vehicles and strong consumer confidence are keeping sales high.
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Our Automotive MMI showed a 3% increase based mostly on increasing demand from automakers. General Motors Co. said its sales dropped 2% in June to 255,210, but Ford Motor Co.’s sales rose 6% to 240,109. Sales of its F-Series pickup truck, the nation’s best-selling vehicle, jumped 29% to nearly 71,000 vehicles, or more than one every minute. Fiat Chrysler said its June sales rose 7% to 197,073.
US Steel Separated From Global Prices
Backed by anti-dumping and countervailing duties, U.S. steel prices continue to enjoy price increases not available elsewhere in the global market. It will be interesting to see if automakers can continue to offer the level of discounts that consumers have grown accustomed as their own supply chain prices go up.
Automakers are getting a sales boost, however, from oil prices which — while they have gone up this year — are still hovering around $50 a barrel. Consumers are still being incentivized to buy new vehicles by gas prices around $2.00 a gallon in much of the nation.
Chinese Sales Soaring, Too
Overseas, growth in car sales in China reached a five-month high in May. Automakers delivered a total of 1.79 million passenger vehicles — sedans, sport-utility vehicles and minivans — to dealers in the world’s largest auto market last month, up 11% from a year earlier, the government-backed China Association of Automobile Manufacturers said on Monday.
Automotive metals are still in the sweet spot they’ve enjoyed for much of the year with low oil prices, strong demand for new vehicles and lighter, stronger metals available to create efficient, desirable cars, trucks and SUVs. Investors have bullishly moved into precious metals due to economic instability in world markets recently but those price increases for catalysts such as platinum and palladium have not yet been felt by automakers. While the auto market is still not growing as fast as it did last year, things could be far, far worse.