- Associated Press - Tuesday, July 3, 2012

DETROIT — From minicars to monster pickups, sales of new cars and trucks surged in June, and eased concerns that Americans would be turned off by slower hiring and other scary headlines.

Automakers reported big gains over June of last year. Chrysler posted its best June in five years. Sales soared at Volkswagen, which is on track for its best year in the U.S. since 1973.

The results allayed fears that growth would stall after a strong start to 2012. Earlier this spring, sales were on track to reach 14.5 million this year, boosted by mild weather and the post-earthquake return of Japanese cars to showrooms. But the pace dropped in May, as the stock market plunged and hiring slowed. In June, there was more bad news about jobs growth, and consumer confidence fell for the fourth straight month.

But buyers didn’t go away. Falling gas prices, cheaper loans and new models like the Ford Escape and Dodge Dart drew them out. A revived housing market lifted sales of pickups. And there was still plenty of demand from people who bought cars in the middle of the past decade and needed to replace them. Annual sales hit a high of 17 million in 2005, and those cars are now seven years old.

“If a family in Iowa’s only mode of transportation is on the fritz, they are going to buy a replacement vehicle, even if Spain’s economy is on the brink of collapse,” says Alec Gutierrez, a senior market analyst at Kelley Blue Book.

Automakers also started their Independence Day promotions a little early and that juiced sales at the end of the month.

“In the last two weeks we really went all-out,” says Bill Underriner, who sells Volvos, Buicks, Hondas and Hyundais in Billings, Mont.

Colorful ads with holiday deals excited buyers, says Jessica Caldwell, a senior analyst with pricing site Edmunds.com. The Buick Verano small car - one of Mr. Underriner’s big sellers last month - is now $239 per month for a two-year lease. That’s $50 less than usual.

Deals like the Verano reflect the low interest rates and improving credit availability that have helped sales this year. The average interest rate on a 60-month new-car loan is 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.

Falling gas prices meant buyers were more likely to consider bigger cars and SUVs, not just the small cars that sold well at the beginning of the year. Jeep Liberty SUV sales rose 50 percent and the Ford Explorer jumped 35 percent. Gas averaged $3.43 per gallon at the end of June, down 41 cents from the end of March.

Pickup truck sales also improved as home building perked up. Chrysler’s Ram pickup sales rose 12 percent and sales of the Ford F-Series - which has long been the country’s best-selling vehicle - rose 11 percent.

At Chrysler, sales of the tiny Fiat 500 and Chrysler 300 large sedan more than doubled from a year earlier, helping the company to a 20-percent gain for the month.

General Motors’ sales rose 16 percent, helped by strong demand for the Chevy Malibu midsize sedan and Volt electric car.

Ford’s overall sales rose 7 percent. The Escape small SUV posted its best month ever - rising 28 percent - after a new version of the popular vehicle went on sale. Ford said 40 percent of Escapes sold were new models, while the rest were heavily discounted older versions.

The sales were welcome news to investors, who have beaten down General Motors Co. and Ford Motor Co. shares in recent days over losses in Europe. Ford’s stock climbed 2 percent to $9.60, while GM’s stock jumped 6 percent to $20.67.

Toyota’s sales rose 60 percent for the month and Honda’s climbed 49 percent, but that wasn’t surprising. Last year, both automakers had little inventory at U.S. dealerships because of the earthquake and tsunami that hit Japan in March. Now, they’re taking back sales that their rivals gained last year.

AP writer Tom Krisher contributed to this report.