Auto ETF Could Shift into High Gear | ETF Trends

U.S. automobile sales over the past six months have been the best in five-years, potentially signalling greater momentum in the auto industry and sector-related exchange traded fund.

The First Trust NASDAQ Global Auto Index Fund (NasdaqGM: CARZ), which provides access to global automobile manufacturers, rose 5.8% year-to-date.

The largest automakers saw improved U.S. car sales in June and the first half of the year, forecasting even better numbers over the second half, Bloomberg reports. [Two of the big Three Could Drive the Auto ETF Higher]

“We just wrapped up the U.S. auto industry’s best six months in a decade,” Kurt McNeil, GM’s U.S. vice president of sales operations, said in the article. “People feel good about their jobs and the direction the economy as a whole is taking, so the second half of the year should be strong, too.”

Fueling the growth in the auto industry, low gasoline prices and interest rates allow consumers to more freely spend on big ticket items, notably sales of sport utility vehicles and pickups. The average vehicle sold for $33,340 in June, or 2.5% higher year-over-year.

“Auto sales continue to push higher and are slated to have one of the strongest years ever,” Mark Williams, an analyst for Kelley Blue Book, said in the Bloomberg article. “Demand for SUVs and trucks continues to drive the market, which resulted in several top automakers posting higher sales.”

Ford Motor (NYSE: F) expects industrywide auto sales were on track to increase 4% last month. Analysts also calculate that June industry sales volume would be the best in nine years at 1.49 million. Looking ahead, new products and rising consumer confidence could support growth. For instance, Ford is reaching full production on its F-150 pickup and is projecting a second-half sales surge of its top-selling vehicle line.