* June annual sales rate 11.45 mln vs 12 mln analysts' view
* GM, Ford trim incentives offered to buyers
* Fewer Japanese cars lead some shoppers to stay home
* GM, Ford and Toyota expect stronger second-half sales
* Analyst: automakers "in denial" about U.S. auto market
(Adds final numbers, industry details)
By Deepa Seetharaman and Ben Klayman
DETROIT, July 1 The auto industry sputtered to
its second consecutive month of weaker-than-expected U.S. sales
in June, marked by disappointing results from General Motors Co
(GM.N), Ford Motor Co (F.N) and the big Japanese automakers, as
the weak economy and tight supply of cars left buyers wary.
Consumers were faced with higher prices for many vehicles
as U.S. automakers trimmed the deals on their vehicles, a
strategy analysts and investors said has backfired in May and
June. Automakers raised prices of their cars and trucks after
the March 11 Japan earthquake that constrained inventories.
"The consumer's still struggling out there," said Gary
Bradshaw, a portfolio manager with Hodges Capital Management,
which owns Ford shares. "Car buyers have paused a little.
"These car prices have really gone up an awful lot," he
added. "They probably need to tone that back a little bit if
they can. I know their commodity costs are rising, but there's
a fine line in there."
GM and Ford trimmed the incentives they offered buyers in
June to buy new cars by 2 percent and 2.4 percent,
respectively, from May, according to TruCar.com.
GM also tempered its full-year forecast for the industry as
some consumers were still holding back on buying cars.
Toyota Motor Corp (7203.T), Honda Motor Co (7267.T) and
Nissan Motor Co (7201.T) missed forecasts despite more generous
rebates as consumers responded to fewer cars on the Japanese
automakers' lots by staying home, analysts said.
Monthly car sales figures are among the first snapshots of
U.S. auto sales in June rose 7 percent to 1.05 million
vehicles, or an annualized rate of 11.45 million, according to
Autodata. That falls short of the 12 million expected by a
Reuters poll of economists and is the lowest rate in a year.
The sales fell almost 1 percent from May, when the annual
rate of 11.8 million vehicle also missed expectations.
Automakers' stop-and-go recovery [ID:nCARS1]
Top 20 selling vehicles in US through June [ID:nN1E7601I2]
June US auto sales 11.45 mln annual rate [ID:nN1E7601DV]
US manufacturing rises but consumers wary [ID:nN1E7600JI]
Nevertheless, investors received good news more broadly as
the pace of growth in the U.S. manufacturing sector picked up
for the first time in four months in June, a sign of optimism
for the sputtering economy.
GM's U.S. sales chief, Don Johnson, cited the impact of the
Japan crisis as the main driver of June's disappointing auto
"Some consumers have decided to sit on their hands and
delay their purchasing," he told reporters on a conference
call. "We view this as temporary.
"It is much less to do with the economy than it is simply
with the levels of inventory that some of our competitors,
particularly our Japanese competitors, have," Johnson added.
STATE OF DENIAL
The U.S. auto industry was likely to finish the full year
at "the lower end" of the company's forecast for 2011 sales of
13 million to 13.5 million cars and trucks, Johnson said.
GM, Ford and Toyota expect stronger sales in the second
half of the year.
However, Jefferies analyst Peter Nesvold said the industry
was on a "slippery slope" in thinking the Japan crisis was the
only reason for its problems.
"That is when you're starting to be in denial about where
the end market is going," he said. "I feel like the end market
is weaker than what they're acknowledging."
May and June were the months analysts said the industry,
especially Japanese automakers, suffered most due to the
earthquake and tsunami, which caused parts shortages and
tighter availability of cars.
Ford and Toyota also said demand in California, the
country's largest auto market, was hurt because many residents
chose to wait until July when the state sales tax declined by 1
percentage point. That means savings of $250 on a $25,000 car.
However, several analysts said that was not a major factor.
GM reported sales last month of 215,358 cars and trucks, up
10.5 percent from last year, while Ford's sales rose 13.6
percent to 194,114 vehicles. Both fell short of expectations.
Chrysler FIA.MI sales rose 30 percent, beating
expectations. Hyundai's (005380.KS) were up 16 percent.
Nissan reported an 11.4 percent jump in sales, a result
that "disappointed" Al Castignetti, head of the Nissan brand in
Toyota and Honda, both suffering from extremely tight car
inventories due to the Japan crisis, each saw sales fall a
larger than expected 21 percent. Edmunds.com said it was their
worst June results since 1997.
All three of the big Japanese automakers hiked their
incentive offers in June over May, TrueCar said.
One bright spot was the increasing demand for pickup
trucks, which all the automakers cited over the past two days.
Consumers are returning to their beloved trucks as gasoline
prices decline, analysts and investors said. According to the
motor club AAA, the average U.S. gas price is now $3.55 a
gallon, down about 40 cents in the past two months.
U.S. automakers this month dominated the list of
top-selling vehicles due to the short supply of many cars from
the Japanese automakers.
GM's Chevrolet and Ford held the top six spots on the list,
with the Chevy Cruze small car and Malibu mid-size sedan
topping Toyota and Honda's cars at the No. 3 and No. 4 spots.
The Ford and Chevy full-size pickups led the way.
In Japan, new vehicle sales in June slumped by more than a
fifth, while in South Korea Hyundai and Kia Motors (000270.KS)
extended their strong run with double-digit growth. French car
sales fell for the third straight month, while Brazil car sales
rose 15.9 percent. [ID:nL3E7I10AR] [ID:nWEB8053]
GM shares closed 0.7 percent higher at $30.58 on Friday,
while Ford shares rose 1.7 percent to $14.02. The broad S&P 500
Index .SPX was up 1.4 percent.
(Reporting by Deepa Seetharaman and Ben Klayman in Detroit,
editing by Matthew Lewis)