Automakers See 8% Sales Uptick in May

Falling Unemployment, Stable Gasoline Prices And Low Interest Rates Helped Goose U.S. Sales

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U.S. light vehicle sales rose 8% in May as the industry rebounded from a disappointing April amid a surge in pickup sales and a rise in retail demand, Automotive News reports today.

2013 Nissan Altima
 2013 Nissan Altima

Nissan Motor Co., Subaru, Ford Motor Co. and Chrysler Group posted solid double-digit increases to lead the gainers. Honda Motor Co., General Motors and Toyota Motor Corp. recorded smaller gains, while Mitsubishi was the only automaker to fall.

Healthy demand for large pickups and crossovers, as well as rising retail volumes, drove industry gains last month, automakers said.

Stable and consistent

In a positive development for the industry's profit outlook, industry retail sales climbed 9% -- the best monthly showing since August 2007 -- and have now topped 1 million units for three consecutive months, said Bill Fay, general manager of the Toyota Division.

Retail sales, while often supported by incentives, tend to be more profitable than fleet and commercial deliveries. Mr. Fay said industry retail volumes were aided by falling unemployment, stable gasoline prices and low interest rates again last month.

"We see the industry being stable and consistent through the second half of the year," Mr. Fay said.

The industry's 8% rise for the month topped the 7% average estimate of 10 analysts polled by Bloomberg.

Overall, light truck deliveries climbed 11% last month, more than double the 5% gain in car sales. For the year, light vehicle volume has climbed 7% with car volume rising 4% and light-truck deliveries advancing 11%

Nissan, Ford, Chrysler show gains

Nissan tallied a May U.S. sales record of 114,457 units, a gain of 25% on redesigned models such as the Sentra, Pathfinder and Altima. Volume at the Nissan division rose 31% offsetting a drop of 25% in deliveries at the Infiniti brand.

At Ford, sales rose 14%, with car volume up 9%, utility vehicle sales advancing 15% and truck deliveries jumping 18%. The company's retail volume advanced 17% and F-Series pickups surged 31% to 71,604.

Sales rose 15% at the Ford brand and 0.4% at Lincoln.

Ford said separately it plans to build 740,000 vehicles in North America during the third quarter, an increase of 10 percent from the third quarter of 2012.

At Chrysler, sales rose 11% in May, with the company's car sales climbing 16% and light truck deliveries advancing 9%.

It marked the 38th consecutive month that the automaker's U.S. sales have advanced.

"We continue to see strong retail sales throughout our product lineup," Reid Bigland, head of U.S. sales for Chrysler Group, said in a statement.

Sales rose 24% at the Ram brand, 23% at Dodge, 1% at Jeep and Fiat, while volume at the Chrysler brand slipped 2%.

Ram pickup deliveries rose 22% to 31,672. SUVs deliveries were also strong last month, with Jeep Grand Cherokee sales up 21% and Durango volume rising 24%.

Retail propels Honda

At Honda, May sales volume rose 5%, with deliveries at the Honda brand advancing 5%, offsetting a 1.5% decline at Acura.

Retail demand for the redesigned Accord and Honda's light trucks were especially strong, the automaker reported.

GM, meanwhile, recorded a 3% gain. While GM's retail sales rose 9%, its car sales slipped 6% and fleet volume dropped 10%.

The company's truck sales climbed 15% and crossover demand rose 3%.

Deliveries of the Chevrolet Silverado and GMC Sierra pickups advanced 22%.

"The pickup rebound is in full swing and we're seeing strong retail demand for our crossovers" Kurt McNeil, vice president of U.S. sales operations for GM, said in a statement. "These are all powerful signs that the gradual recovery in the economy is becoming more broad-based."

That would keep the U.S. light-vehicle market on pace for its best year since 2007.

Malibu slump continues

Volume rose 40% at Cadillac, 7% at GMC, and 1% at Chevrolet. Buick sales slipped 3%.

While demand for Chevrolet's small cars rose, Malibu deliveries slumped 36% and have now declined 18% for the year.

GM outsold rival Ford by only 6,875 units last month, though GM maintains a lead of more than 100,000 units for the year. Ford has outsold GM only twice -- in March 2011 and February 2010 -- over the last 15 years, according to the Automotive News Data Center.

Helped by strong Forester, Outback and Crosstrek demand, Subaru posted record monthly sales of 39,892 in May, an increase of 34% over May 2012.

Toyota's May sales edged up 3%, with volume up 2% at the Toyota brand, 4% at Lexus and 9% at Scion.

For the second consecutive month, sales at the Volkswagen brand slid, with May volume off 1.7%, despite an uptick in consumer traffic and closing rates, and new May sales records for Jetta and Passat deliveries. VW Group sales rose 4%, however, aided by double-digit gains at Porsche and Audi.

Mazda ended a four-month sales skid with a 19% gain in May deliveries on higher Mazda6 and CX-5 volume.

Strong dealer showroom traffic has automakers and analysts expecting overall industry sales to climb as high as 15.5 million vehicles this year, up from 14.5 million last year.

Pent-up demand

Rising consumer spending, attractive financing offers and a recovering housing market have buoyed demand for light vehicles, notably large pickups and crossovers. In addition, aging cars and trucks have forced many Americans into the market for replacement vehicles, analysts and industry executives said.

"There's still a great deal of pent-up demand that needs to work its way through the system," Gabelli & Co. auto analyst Brian Sponheimer said before automakers began issuing May results today. "On the whole, we're still looking at another two years of outperformance for the auto industry as it relates to the broader economy."

The housing and construction recovery, relatively affordable gas prices and high inventory levels at the Detroit 3, along with nearly $5,000 or more in cash rebates on the Ford F-Series, Chevrolet Silverado and Ram, will keep pickup demand strong, Kelley Blue Book analyst Alec Gutierrez said last month.

New or redesigned models such as the Honda Accord, Cadillac ATS, Acura RDX, Toyota Avalon, Ford Fusion and Hyundai Santa Fe are also driving demand higher.

May U.S. sales at Hyundai increased 2%, the brand's second-best month ever. Vehicle inventory remains tight, yet Hyundai managed to post a 33% increase in Elantra compact sales, CEO John Krafcik said in a posting on Twitter.

Holiday deals

Some dealers said May sales were helped by Memorial Day holiday deals that were extended through early June by some automakers. The early holiday this year also helped drive May sales, some analysts say.

At Phil Long Ford in Colorado Springs, Colo., new car sales manager Michael Gonzales said May was great for new vehicle sales, notably pickups.

"Memorial Day sales were wonderful," Gonzales said. "Our truck numbers seem to be moving enough."

He cited Colorado's improving economy and Colorado Spring's stable military presence as factors driving volume.

Fuel economy also remains a top priority for consumers, Gonzales said, which is helping to drive sales of the Ford Focus small car, mid-sized Fusion sedan and C-Max hybrid.

Said Gonzales: "People are hopefully being more confident in the economy and spending a little more money."

Automotive News' Mark Rechtin, Isabella Shaya, Ryan Beene, Bloomberg and Reuters contributed to this report

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