AUTOS

Demand for SUVs and luxury vehicles keeps U.S. auto sales hot in July

Dee-Ann Durbin The Associated Press
Published Monday, August 3, 2015 1:14PM EDT Last Updated Monday, August 3, 2015 5:27PM EDT

In this Thursday, July 2, 2015, photo, Robert Schemer, his wife, Kelly, and their son Graham, 9, pose next to their newly purchased pre-owned 2013 Ford Flex Limited, at the Star Ford Lincoln dealership in Glendale, Calif. At right is sales consultant Allan Calix. Summer deals and big demand for SUVs and luxury vehicles kept U.S. auto sales strong in July, according to reports released, Monday, Aug. 3, 2015. (AP / Damian Dovarganes)

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DETROIT -- More Americans are buying cars that say "look at me."

Luxury vehicles like Audis and Volvos drove off dealer lots at a furious pace in July and, combined with sizzling demand for SUVs, helped the auto industry roll on toward its best annual sales since before the recession. July sales rose 5 per cent to more than 1.5 million, according to Autodata Corp.

Subaru reported the biggest sales gain of 10.5 per cent over last July. General Motors, Fiat Chrysler and Hyundai all saw 6 per cent sales increases, while Honda and Nissan saw 8 per cent gains. Ford's U.S. sales rose 5 per cent. Volkswagen sales rose 2 per cent. Toyota's sales were flat, hurt by a big dip in car sales.

The high demand for big, pricey vehicles is defying recession-era predictions that Americans would downsize and stop flaunting their wealth. Luxury sales were up 10 per cent in the first six months of this year; in the same time period, mass-market vehicle sales rose just 3 per cent, according to car shopping site TrueCar.com.

The surge in SUV sales is due in part to relatively low gas prices, which ended July at around $2.70 per gallon nationwide. Sales of Nissan's new Rogue SUV jumped 51 per cent in July, while sales of GM's Buick Encore jumped 68 per cent.

Summer discounts to clear out 2015 models also lured buyers. Sales of midsize sedans have been struggling as Americans pass them over for small SUVs, so automakers enticed buyers with zero-per cent financing deals on the Toyota Camry, Ford Fusion, Nissan Altima and other sedans. It worked. Altima sales rose 27 per cent and set a new July record.

Another big motivator: status. Luxury brands made up 11.5 per cent of vehicles purchased so far this year, up from 10.2 per cent three years ago, according to TrueCar.

Audi saw its best July ever in the U.S., with sales up 21 per cent to more than 17,500 cars and SUVs. Lincoln's sales jumped 21 per cent; the brand sold 785 Lincoln Navigator SUVs, or 25 per day, at more than $62,000 apiece. Acura and Infiniti sales both climbed 20 per cent. Volvo's sales were up 15 per cent.

Luxury brand sales have been growing faster than mass-market ones since 2013, but the pace is accelerating for several reasons, says Larry Dominique, TrueCar's executive vice-president.

Luxury automakers are adding more models at lower prices, which is attracting new buyers. Mercedes' CLA sedan, introduced in 2013, starts at $31,500, while Lexus has a new small SUV, the NX, that starts at $34,480. That's within reach of younger buyers. Dominique said Millennials are now leasing luxury cars at a higher rate than other generations.

Dominique said that before the recession, when housing values were high, the industry believed luxury sales were inflated because people were borrowing against their home values. But that wasn't the case. After the recession, luxury sales took off even before home values had recovered.

"People who buy luxury want luxury. It's a cultural phenomenon," Dominique said.

Increases in the stock market have fueled luxury sales. Low interest rates have also helped some luxury buyers lower their monthly lease or loan payments.

Here are more details, by automaker:

GM's sales rose 6 per cent to 272,512. Buick sales jumped 18 per cent, but Cadillac sales were down. GMC and Chevrolet sales were up thanks to demand for trucks. Chevrolet Silverado pickup truck sales were up 34 per cent in July.
Ford's sales were up 5 per cent to 222,731. F-Series pickup sales, which had been down due to lack of inventory as a new truck went into production, were up 5 per cent. But Ford's car sales fell 4 per cent.
Toyota's sales were up less than 1 per cent to 217,181. Sales of the Tacoma small pickup jumped 29 per cent, while Lexus SUV sales were up 28 per cent thanks to the new NX small SUV. But car sales were down. Prius hybrid sales dropped 13 per cent.
Fiat Chrysler's sales rose 6 per cent to 178,027. Jeep sales increased 23 per cent and Ram sales rose 1 per cent, but Dodge and Fiat sales were down.
Honda's sales rose 8 per cent to 146,324. Honda's SUV and truck sales jumped 13 per cent, led by the CR-V SUV and the Odyssey minivan. Honda's car sales were up 3 per cent.
Nissan's sales rose nearly 8 per cent to 130,872. Nissan said sales of its trucks and SUVs set a new July record, but low gas prices took a toll on the electric Nissan Leaf, which saw sales drop 61 per cent.
Hyundai's sales rose 6 per cent to 71,013. Sales of its Santa Fe SUV were up 35 per cent.
Subaru's sales rose 10.5 per cent to 50,517. Sales of the XV Crosstrek small SUV jumped 30 per cent but sales of the Outback SUV fell 8 per cent from last July, which was a record July for the Outback.
Volkswagen's sales rose 2.4 per cent to 31,300 vehicles. Sales of the new Golf and Jetta sedans more than doubled over last July.