DETROIT: Automakers reported steady second quarter US vehicle sales, despite what normally would be a bleak backdrop for the car business.
Since early spring, American consumers have confronted sharply higher petrol prices, an uptick in inflation, unease over jobs, and jitters over the Iran war.
And yet, US vehicle sales in the first half of the year declined just 3% year-on-year (y-o-y), according to Omdia Automotive.
General Motors reported a 4% y-o-y decline in the second quarter, but did see increases in sales of the GMC Sierra truck and more affordable offerings, including the Buick Envista.
Crosstown rival Stellantis saw a 6% increase in quarterly sales on the back of strong Ram truck sales despite higher gas prices.
Hybrids boosted sales for Toyota Motor and Hyundai in the quarter, which were up 1% and 4%, respectively.
Hyundai North American president Randy Parker said the company is moving at “warp speed” to bring hybrids into its Georgia plant to meet demand.
Dealers, analysts and executives cite several factors helping to stabilise the US car market.
Affluent buyers, who are less sensitive to inflation and rising fuel prices, account for a growing share of vehicle sales.
Meanwhile, borrowing costs in recent months receded slightly, helping shoppers offset those added cost pressures, according to research firm JD Power.
More car shoppers also are gravitating to hybrid models to avoid high petrol prices, helping to buoy overall sales volumes.
“The new-vehicle market has been essentially shrugging off the Iran war and this huge run-up that we’ve had in oil prices and fuel prices,” said Charlie Chesbrough, senior economist at Cox Automotive.
The highly cyclical car market historically has contracted during wars and energy shocks.
Big-ticket items
Car sales fell in the months following the US invasion of Iraq in 2003, for example, and in 2008, when petrol prices surged above US$4 per 4.5l for the first time.
Today, affluent buyers continue to prop up the US car market, dealers and analysts said, an example of the K-shaped economy, where higher-income consumers continue to spend on big-ticket items, while lower-income people struggle.
Last year, buyers with household incomes of US$100,000 or less accounted for 36% of new vehicle sales, down from 51% as recently as 2020, according to S&P Global Mobility.
In June, the average transaction price for a vehicle in the United States ticked higher by 1% from a year earlier, to about US$46,400, according to JD Power, although that is down from the peak.
Consumers, however, have gotten some relief from a dip in interest rates on new-vehicle loans.
In June, the average rate fell by about one-third of a percentage point, to 6.66%, the lowest in four years, JD Power said.
Americans also continue to stretch their loan terms to lower monthly car payments. In the second quarter, a record 24% signed on for loans of 84 months or longer.
Those stretched loan terms have helped more people to afford new cars.
Monthly vehicle payments as a percentage of disposable income have continued to decline, hitting 13.3% in the first quarter, according to a new report from AlixPartners.
Elevated prices at the pump have not yet sparked a US electric vehicle revolution, but they have nudged some shoppers to search for fuel-sipping hybrid options, Cox Automotive data showed.
The research firm found that 56% of shoppers said rising petrol prices make them more likely to consider a hybrid. Hybrid sales were up 19% in the first half of the year from 2025, according to Omdia.
“Every hot product I have is a hybrid or an electric,” said Jim Walen, a Seattle dealer with Hyundai and Stellantis stores.
Hyundai’s electrified sales of battery electric vehicles and hybrids represented 33% of the automaker’s total sales in the first half of the year.
In the quarter, Hyundai’s hybrid sales were up 71%.
At Toyota, sales of electrified vehicles were up about 20% in the quarter, representing 57% of total sales volume.
Meanwhile, GM, which does not sell hybrids, saw a 33% decline in sales of battery electric vehicles.
Cox analysts said the hybrid trend could vault Toyota past GM for the US sales crown this year.
Toyota last surpassed GM in 2021, marking the first time in almost a century that GM was not the nation’s top seller.
GM is still leading through the second quarter with 1.34 million sales to Toyota’s 1.24 million. — Reuters
