Find or Sell any Parts for Your Vehicle in USA

U.S. car sales surge 19 percent in May

Thu, 03 Jun 2010 00:00:00 -0700

All major automakers except Toyota reported double-digit U.S. sales gains in May, as the light-vehicle sales rate hit its highest level since December.

Sales rose 19 percent from May 2009, marking the eighth-straight monthly increase, the longest such streak since June 2000, according to Bloomberg Data. The seasonally adjusted annual sales rate hit 11.8 million, beating analysts' predictions for demand in the low-11-million-unit range.

Ford Motor Co., one of the leaders in the Memorial Day weekend incentive spree, gained 22 percent for the month. General Motors--which this week marked the anniversary of its 2009 bankruptcy filing--saw overall sales rise 17 percent.

Chrysler Group climbed 33 percent compared with May 2009, a month the automaker spent in bankruptcy.

All three Detroit automakers beat analysts' average forecasts by at least 6 percentage points.

Despite continuing a string of incentives it started in March, Toyota Motor Sales U.S.A. increased only 7 percent, its worst sales performance since posting declines in January and February during recall problems. Toyota is still trying to fix its image after its recent global recalls of more than 8 million vehicles to address unintended acceleration and braking problems, said Jeff Schuster, lead forecaster for tracking firm J.D. Power and Associates.

Also, “there's likely some payback from the incentives that they put in place in March,” Schuster said. “They lost their effectiveness.”

Bob Carter, general manager of the Toyota division, attributed Toyota's poor sales performance partially to low inventory of light trucks and 2010 models that qualified for 0 percent financing. He also pointed out the boost Toyota got last year during GM's and Chrysler's financial woes. Toyota is increasing production of light pickups and SUVS in the next 90 days, he said.

Nissan North America and American Honda took advantage of Memorial Day discounts--Nissan grew 24 percent and American Honda grew 19 percent. Hyundai-Kia was up 28 percent for its 11th-straight monthly gain.

Slow recovery

The recovery in U.S. auto sales remains slow, as uncertainty persists in the housing and job markets. And the European debt crisis could further hamper consumer confidence, analysts said.

Still, GM stuck with its 2010 forecast of 11.3 million to 11.8 million U.S. light-vehicle sales for the industry.

“We've all witnessed significant volatility in the financial markets,” Steve Carlisle, GM's vice president of U.S. sales operations, said of the European debt crisis. “We don't think it signals another collapse in the global economy or in the vehicle industry.”

Carlisle predicted that the U.S. light-vehicle sales rate, which had averaged 11 million units through April, would stay mostly flat through July and start to pick up in August and September.

Efraim Levy, an equity analyst with Standard and Poor's, said sales recovery from last year's 10.4-million-unit total so far tracks with his expectations for 11.65 million sales this year.

“People are still concerned about their jobs, and now we have some more stock market volatility,” he said. Next year, “we'll put more distance behind us from the recession.”

He predicts sales of 13.5 million in 2011, about even with 2008's 13.2 million units.

Ford rode the momentum of its F-series pickups, which the company said gained 49 percent for their highest sales total in more than two years. Lincoln fell 10 percent, and sales dropped 11 percent at Mercury.

Ford increased its second-quarter production forecast by 15,000 vehicles, to 640,000. It said third-quarter production would total 570,000, up 16 percent from 2009.

May sales were tracking lower until Ford, Nissan and Honda announced incentives timed for the Memorial Day weekend.

Over the past three years, sales during the holiday weekend ran about 40 percent higher than the typical May weekend. But sales on the last day of the month this year were more than double the average day, according to Edmunds.com, a consumer auto site.

The industry spent slightly less on incentives in May than in April as inventories declined, Edmunds.com said. The average of $2,603 per vehicle was down 1 percent from the month before and $340 or 12 percent from May 2009.

Fleet and 'a blockbuster'

May sales finished stronger than J.D. Power had forecast, despite weak second and third weeks, analyst Schuster said. May's sales rate is the highest since December's 11.9 million, according to the Automotive News Data Center.

“Either fleet mix was really big, or the [Memorial Day] weekend was a blockbuster,” Schuster said.

Both Ford and GM reported strong fleet sales to commercial buyers, which both Schuster and Levy pointed to as a sign of economic recovery. Schuster also said an increase in daily rental sales doesn't concern him right now, as rental companies are replenishing fleets that aged during the recession.

Subaru of America posted a 35 percent increase last month. The Japanese brand joined Hyundai and Kia as the only brands to post U.S. sales gains last year.

BMW Group's sales fell 4 percent, the first decline for the German automaker since November. Suzuki's sales slid 26 percent; it last gained in July 2008.

Kathy Jackson, Reuters and Bloomberg News contributed to this report




By Chrissie Thompson- Automotive News