American auto sales rise in first six months

DETROIT — Neither higher gas prices nor rising interest rates could put a damper on U.S. auto sales during the first half of the year.

Sales rose 1.8 per cent during the first half of the year, while June sales were up about five per cent compared with a year ago, according to Edmunds.com.

Analysts said the boost was fuelled by strong consumer confidence and low unemployment.

But analysts at Cox Automotive, which includes Kelley Blue Book, issued a cautionary note on the numbers, saying that much of the increase was due to low-profit sales to fleet buyers such as rental car companies, and retail sales to individual buyers were propped up by rising incentives such as rebates and subsidized leases.

Sales are “defying gravity” said Jonathan Smoke, chief economist for Cox. “Retail sales have been flat, and even those sales have been supported by incentives being up six per cent.”

Cox analysts also said rising interest rates and a possible trade war due to tariff threats from U.S. President Donald Trump could raise new-vehicle prices and payments, and cut into auto sales in the second half. Still, given the fact that automakers are willing to spend to keep their share of the market, Cox analysts raised their full-year forecast by 100,000 vehicles to 16.8 million vehicles.

Trucks and SUVs accounted for 68 per cent of the market in June, a record high as car sales continued to fade, Edmunds said.