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Weekly Recap: The implications of strong new car sales

New car sales are on a roll in the United States this year, and analysts are optimistic the industry will maintain its torrid pace. Sales increased 1.6 percent in May and reached an eye-popping seasonally-adjusted selling rate of 17.8 million, the strongest pace since July 2005, according TrueCar research. That positions the industry for one of its strongest years ever, as consumer confidence, low interest rates, low fuel costs, and an influx of new products propel gains. In addition to the positive economic factors, May also featured warmer weather across much of the US, an extra weekend, and it came on the heels of relatively weak April sales. Analysts suggest income tax refunds and the promise of summer driving and vacations also traditionally help May sales. "While 2015 will be one of the best years in the history of the US industry, in some ways it may be the very best ever," IHS Automotive analyst Tom Libby wrote in a commentary. "Not only are new vehicle registration volumes approaching the record levels of the early 2000s, but now registrations and production capacity are much more closely aligned so the industry is much more healthy." Capacity, an indicator of the auto sector's health, is also expected to grow. Morgan Stanley predicts it will eventually hit at least 20 million units per year, as many companies, including General Motors, Ford, Tesla, and Volvo are investing in new or upgraded factories. "The best predictor of US auto sales is the growth in capacity, and frankly, we're losing count of all of the additions – there's literally something new and big every week," Morgan Stanley said in a research note. Transaction prices, another telling indicator, also continue to show strength. They rose four percent in May to $32,452 per vehicle, and incentives dropped $10 per vehicle to $2,661, TrueCar said. "New vehicle sector and segment preference indicates consumers are confident about the economy and their finances," TrueCar president John Krafcik said in a statement. Still, Morgan Stanley noted the robust sales did little to immediately impact automaker stock prices and suggested it might be a prime time to sell if sales reach the 18-million pace. "Perhaps the biggest reason may be that investors have seen this movie before," the firm wrote.

Chevy recalls 73k Cobalts for side airbag non-deployment

Chevrolet is recalling 73,424 examples of the 2010 Cobalt in the US and Canada because the driver's side curtain airbag might not deploy in a crash. These vehicles carry build dates between January 4 and June 23, 2010, and, specifically, 59,474 of them are in the US. "GM is aware of one crash with one injury that may be related to this condition," the company said in a statement. The problem occurs because of improper routing of the side-impact sensor wiring harness in the driver's door, and there can be a short circuit causing the curtain airbag not to deploy. The campaign to fix the issue will begin on August 26. Dealers will inspect the vehicles and will repair the issue on any affected examples. Related Video: GM Statement: General Motors is recalling 59,474 2010 Chevrolet Cobalt sedans in the U.S. because some of them may have been built with improper side impact sensor wire routing in the left front door. Dealers will inspect all suspect vehicles and any found with the condition will be repaired free of charge to the customer. GM is aware of one crash with one injury that may be related to this condition. Including vehicles sold in Canada, the total recall population is 73,424. RECALL Subject : Improperly Routed Side Impact Wire Harness Report Receipt Date: AUG 10, 2015 NHTSA Campaign Number: 15V500000 Component(s): AIR BAGS Potential Number of Units Affected: 59,474 All Products Associated with this Recall Vehicle Make Model Model Year(s) CHEVROLET COBALT 2010 Details Manufacturer: General Motors LLC SUMMARY: General Motors LLC (GM) is recalling certain model year 2010 Chevrolet Cobalt vehicles manufactured January 4, 2010, to June 23, 2010. The affected vehicles may be equipped with an improperly routed Side-Impact Sensor (SIS) wiring harness in the driver side front door. The misrouted wiring harness could cause an electrical short that disables the driver side curtain air bag. CONSEQUENCE: A disabled driver side roof-rail air bag will not deploy in the event of a crash necessitating deployment of that air bag, increasing the risk of injury to the driver. REMEDY: GM will notify owners, and dealers will inspect the sensor's wiring in the driver's door and make repairs as necessary, free of charge. The recall is expected to begin August 26, 2015. Owners may contact Chevrolet customer service at 1-800-222-1020. GM's number for this recall is 15075.

2016 Chevy Volt will start at $33,995*

One of the biggest mysteries regarding the 2016 Chevy Volt has been revealed. Chevy announced today that the next-gen plug-in hybrid will have an MSRP of $33,995, which includes GM's $825 destination fee. That's a few hundred dollars less than the current Volt, which has an MSRP of $34,170. The second-gen Volt is about more than a price cut, though. The car has an increased all-electric range (50 miles vs. 38 in the current model) and better fuel economy. Once the battery power runs out – which it doesn't do, in most situations, since 90 percent of all trips are electric-only – the no-longer-premium-only gas engine offers 41 miles per gallon, up from 37 mpg. We know most buyers are price-conscious, and with the still-available federal tax incentive of up to $7,500, the new Volt can be had for $26,495. That should put a spring back into sluggish Volt sales, which are down 46 percent year-over-year so far in 2015. Through the end of April, GM has sold a cumulative 76,136 first-gen Volts since introducing the car in 2010. Chevrolet Announces 2016 Volt Pricing Next Gen delivers more technology at new price as low as $26,495 DETROIT – The Chevrolet Volt is poised to continue to bring new owners to the electric plug-in family. Pricing will be as low as $26,495 after the full federal tax credit of $7,500. (Federal tax credit can range from $0 up to $7,500.) In California, the vehicle's largest market, residents of the state will be able to purchase the all-new Volt for as low as $24,995 after state and Federal incentives. The 2016 model will start at $33,995 MSRP, including an $825 destination fee (excluding tax, title, license and dealer fees). This is almost $1,200 less than the current generation Volt. "The next generation Chevrolet Volt delivers more technology, the ability to drive further between gas fill ups and now with even more value to our customers. It's what our loyal Volt owners told us they wanted," said Steve Majoros, Director, Chevrolet Marketing. "We are confident we will continue to attract new customers to Volt with the vehicle's product improvements and attractive price." The Volt continues to be a success with the brand with nearly 70 percent of Volt owners trading in a non-GM product or adding to their household fleet in 2014, the highest of any Chevy nameplate. The number one trade-in for the Volt is the Toyota Prius. To date more than 75,000 first generation Volt owners have driven hundreds of millions of EV miles.