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Trucks Lead Auto Sales Surge; Housing Pickup Spurs Demand

A housing-led boom in pickup truck demand pushed U.S. auto sales to pre-recession levels in June. Low interest rates and a gradually improving economy also spurred more Americans to trade in their old vehicles.

Overall domestic sales rose 9% vs. a year earlier to an annualized 15.96 million, the highest since November 2007, Autodata said.

Ford Motor (F) sales rose a better-than-expected 13% vs. a year earlier to 103,860 small cars and trucks. Trucks soared 24% to their best level since 2005.

Ford shares jumped 2.8% to 16.18, a two-year high.

Chrysler's U.S. sales rose 8% last month to 156,686 vehicles, in line with expectations. That was Chrysler's best June since 2007. Ram trucks shot up 23%. Trucks led the Fiat-controlled automaker once again.

"Trucks have been really depressed since 2008," said Jessica Caldwell, a senior analyst at Edmunds.com. "There is a really big pent-up demand market out there for trucks.

Before the recession, drivers bought trucks to have a flashy vehicle on the road, but now most truck sales are to small businesses or people who need them for their jobs, Caldwell contends.

Truck sales are especially important to U.S. automakers, which make most of their profits off larger high-margin vehicles.

But for car buyers, small is beautiful. Smaller, cheaper cars did well as people across the board opted for more fuel-efficient vehicles.

Sales of Ford's Fiesta subcompact more than doubled to 9,363, and Chrysler sold 6,500 Dodge Darts. "Compact and midsize cars are the top-selling cars across the whole spectrum," Caldwell said. "There are new products in those segments, so that attracts people.

General Motors (GM) sales rose 6% year over year to 264,843 vehicles, the highest since September 2008. Silverado sales surged 29%; Sierra sales jumped 33%.

In the stock market, GM shares were nearly flat at 34.10, but still hover near their highest levels since March 2011.

Sales gains were broad-based. Toyota's (TM) rose 14% in America, with Nissan (NSANY) rolling 13% and Honda (HMC) 10%. Volkswagen (VLKAY) was the lone blemish, with a 3% drop due to a lack of new models.

Cheap, available financing helped fueled auto sales.

"Even though there are talks of rising interest rates for mortgages, car loans are generally subsidized," Caldwell explained.

Consumer loans are typically tied to the fed funds rate, which is expected to remain near zero for quite some time. So an uptick in Treasury yields will have a minimal effect on auto financing.

If rising mortgage rates curb housing's recovery, that could slow related pickup sales. But so far home demand remains.