Chrysler June sales jump 20 percent

Kevin Lamarque / Reuters

New Jeeps are pictured on a lot at a Chrysler/Jeep dealership in Vienna, Virginia.

By msnbc.com staff and news wires

Chrysler, the first of the major automakers out of the gate with monthly sales figures Tuesday, beat market expectations by posting a 20 percent increase in U.S. auto sales in June.

It was Chrysler Group LLC's?27th consecutive month of?topping sales?from the previous year, and the Fiat SpA affiliate's best June sales since 2007.

Fiat said Tuesday that it it is consolidating its ownership of Chrysler by exercising an option to purchase around 3.3 percent of Chrysler equity from a trust fund that manages health care for pensioners. The announcement Tuesday said the purchase in the coming weeks will raise Fiat's stake in Chrysler to 61.8 percent.

Auto sales are an early sign of consumer spending each month. The auto industry has been one of the bright spots in the U.S. economy this year, but deteriorating European markets have led industry executives to worry about possible contagion spreading to North America.

J.D. Power and Associates and LMC Automotive expect a 20-percent gain in U.S. auto sales for June.

The Chrysler brand of vehicles showed a 63-percent gain in sales, followed by its Jeep brand at a 23-percent gain, Ram truck up 12 percent and the Dodge brand up only 2 percent, Chrysler said.

Earlier this spring, overall auto sales were on track to reach 14.5 million this year. The pace dropped to 13.8 million in May and most analysts expected it to stay below 14 million in June.

But so far, carmakers aren't panicking. Chrysler predicted a rate of 14.4 million for June.

"Although this softer sales rate may persist over the next few months, we believe that 2012, like 2011, will finish out strongly," Barclays analyst Brian Johnson wrote in a recent note to investors.

Sales in the first four months of this year were boosted by mild weather and the post-earthquake return of Japanese inventories. But since then, the economic picture has gotten cloudier. In June, employers scaled back hiring and manufacturing shrank for the first time in nearly three years. Consumer confidence ? which needs to be strong for buyers to invest in new cars ? fell for the fourth straight month.

The news isn't all worrisome. If sales come in at 13.8 million for the year, they would still be stronger than the 12.8 million in 2011. And they'd be much stronger than the 30-year low of 10.4 million during the recession in 2009.

There continues to be a lot of demand from buyers who bought cars in the middle of the last decade and need to replace them. Annual sales hit a high of 17 million in 2005, and those cars are now seven years old.

Low interest rates and better credit availability could also lure buyers. The average interest rate on a 60-month new-car loan is now 4.5 percent, down from 6.98 percent two years ago, according to Bankrate.com.

"The affordability of cars is probably at an all-time high," Chrysler Group sales chief Reid Bigland said last week.

Other automakers reporting Tuesday:

? Nissan Motor Co. said its sales were up 28 percent. Nissan's Infiniti luxury brand was up 66 percent thanks to the new Infiniti JX crossover.

Reuters and The Associated Press contributed to this report.

A look at what to expect from last June's auto sales, with CNBC's Phil LeBeau.

Source: http://bottomline.msnbc.msn.com/_news/2012/07/03/12542655-chrysler-june-sales-up-20-percent?lite

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