Luc Donckerwolke, a head of Genesis Design Center, speaks to the media next to a new sedan Genesis G70 during its unveiling ceremony in Hwaseong, South Korea, in 2017. Neither higher gas prices nor rising interest rates could put a damper on U.S. auto sales during the first half of the year. THE CANADIAN PRESS/AP, Lee Jin-man

Auto sales rise in 1st half, but analysts warn of turbulence

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 5 per cent compared with a year ago, according to Edmunds.com.

Analysts said the boost was fueled 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 6 per cent.”

Cox analysts also said rising interest rates and a possible trade war due to tariff threats from 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.

The Federal Reserve in mid-June raised its benchmark interest rate for the second time and signalled that it may step up the pace of rate increases. The central bank raised its key short-term rate by a modest quarter-point to a still-low range of 1.75 per cent to 2 per cent. It means that consumers and businesses will face higher loan rates over time.

But Cox analysts said auto interest rates held steady in June, although they expect them to rise. Bankrate.com said on its website new-auto loans are now around 4.75 per cent. Gas prices rose 63 cents per gallon over a year ago to an average price for regular of $2.86, according to AAA, taking a bigger bite out of household budgets.

Here’s how major automakers fared for the first six months of the year, according to Edmunds, which regularly provides content, including automotive tips and reviews, for distribution by The Associated Press:

— General Motors, up 4.2 per cent.

— Ford, down 1.8 per cent.

— Toyota, up 3.0 per cent.

— Fiat Chrysler, up 4.5 per cent.

— Honda, down 0.5 per cent

— Nissan, down 4.8 per cent.

— Hyundai, down 3.3 per cent

— Volkswagen, up 7.2 per cent

Just Posted

WATCH: Rappelling down Red Deer’s Stantec Building a thrilling, scary experience

Advocate reporter chronicles his trip down the 13-storey buildling

Red Deer raises $60,000 for Make-A-Wish Foundation

27 brave residents rappell down Stantec Building

People hurt in rollover near Red Deer

Occupants of a vehicle that rolled south of Hwy 11A were airlifted… Continue reading

Eager-beaver cannabis entrepreneurs already waiting outside Red Deer City Hall

Appications will be accepted on a first-come basis starting on Tuesday

Like father like son: Red Deer area Dreeshen family dedicates life to public service

There are three jobs that could be considered the Dreeshen family business:… Continue reading

WATCH: Gazebo groundbreaking in Waskasoo

Fifty per cent of the $100,000 project is funded by a provincial government grant

Woman killed in collision near Olds

A woman is dead after a collision west of Olds Saturday afternoon.… Continue reading

Evacuation numbers remain at nearly 1,000 as B.C. wildfires rage on

SUMMERLAND, B.C. — Officials in British Columbia’s Okanagan region hope that fire… Continue reading

Survivors recount deadly Missouri duck boat sinking

BRANSON, Mo. — “Grab the baby!” Those were the last words Tia… Continue reading

HMCS St. John’s to return to Halifax after six-month deployment overseas

HALIFAX — The countdown is on for the homecoming of a Halifax-class… Continue reading

Trump says lawyer taping him may be ‘illegal’

BRIDGEWATER, N.J. — The Latest on President Donald Trump and his onetime… Continue reading

Spieth part of 3-way tie for British lead as Woods lurks

CARNOUSTIE, Scotland — Jordan Spieth has a share of the lead in… Continue reading

WWII hero’s lost Purple Heart returned to his family

NEW YORK — A lost Purple Heart medal has been returned to… Continue reading

California girl, 2, accidentally shot and killed by boy, 4

SAN BERNARDINO, Calif. — Authorities say a 4-year-old boy accidentally shot and… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month