Some Needed Perspective on June's Slow Auto Sales

Investors may want to be careful about generalizing June's U.S. auto sales headlines. Story titles such as "Auto sales stay lackluster as carmakers spend little on incentives" and "Sluggish Summer Sales May Signal Weakening Economy" - both of which were real story titles - hardly paint a complete picture.

Here's a look at the rest of the story, complete with the little details that actually make or save investors some big money.

TUTORIAL: Economic Indicators To Know

Lackluster and Sluggish?
It is true that June's auto sales in the United States fell in comparison to May's figures, though barely. For the six biggest-selling automakers in the U.S. (which make up about three-quarters of the nation's total market), the total number of units sold fell from 804,000 to 796,000. That's a 1.0% decline ... hardly lackluster or sluggish. Moreover, many commentaries failed to note that June's auto sales frequently do come in under May's numbers.

The fact is, despite huge sales hits suffered by Honda (NYSE:HMC) and Toyota (NYSE:TM), June of 2011 was the best June the six majors have seen since the economic rebound began. On a year-over-year comparison, most of the major automobile manufacturers actually showed improvement.

Japan's Sales Still Mostly Weak
Speaking of the 800 pound gorilla in the room, how rough have things been for Toyota, Honda, and Nissan (PINK:NSANY) as Japan continues to work its way past March's devastating tsunami?

Incredibly, only Toyota's year-to-date numbers are worse; unit sales are off by 4.0%, versus an average 12.6% increase for the group. Honda is still posting an increase in year-to-date sales in the United States, though of a modest 2.3%. Just to put the tsunami crimp in perspective though, Toyota's June year-over-year sales were lower by 21% (from 140K to 111K), and Honda's were off by 21% as well (from 107K to 84K).

As for Nissan, the smallest of the six players is quickly turning into a 'little engine that could' scenario. Its year-to-date sales are up 15%, and its June's year-over-year sales were higher by more than 11% (from 64,000 units a year earlier to 72,000 units last month), according to data compiled by Reuters.

Their Loss Is The Big Three's Gain
While Honda and Toyota are losing market share, General Motors (NYSE:GM) and Ford (NYSE:F) are more than happy to take up their slack. Ford's year-to-date U.S. market share among the big six manufacturers now stands at 17%, and GM's is 20%, up more than 0.5% from the mid-point of 2010.

Though it's a smaller piece of total market share at just a hair over 10%, it's Chrysler that's taking the most advantage of Honda's and Toyota's absence. Chrysler's market share for 2011 so far is up nearly a full percentage.

All three companies sold more cars in June of this year than they did in June of last year. And, all three have (much) stronger year-to-date unit sales than they did at this time last year.

The Bottom Line - Reality Check
It's amazing how the apparent health of the auto market can change when you take just a couple of steps back and look at the bigger picture and look for historical context. June's total sales in the United Sales frequently make a significant dip, and had Toyota and Honda not been largely out of the picture, one can't help but wonder if we would have actually seen an increase in total sales last month - it only would have taken another 67,000 cars to do it.

Either way, year-to-date unit sales in the United States for these six major auto makers are up a little more than 12%, and were still up compared to June of 2010. That hardly suggests the industry is in the dire straits, as some commentaries would imply. (Learn why it may be profitable to invest in beaten down stocks in Buy When There's Blood In The Streets.)

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