May auto sales hit fastest pace in a decade
Detroit's Big Three automakers reported better-than-expected sales in May, as the industry's sales pace hit its highest point for any month in nearly a decade, with buyers flocking to dealerships for trucks and SUVs.
Auto industry sales hit nearly 1.64 million last month, up 1.6 percent from a year ago, despite one fewer selling day compared to May 2014. The annual sales pace hit 17.79 million in May, up from 16.73 million a year earlier and was the highest figure since July 2005, according to Autodata Corp.
With lower gas prices, easy credit and low interest rates, light truck sales in May continued to outpace car sales. Light truck sales represented 53.2 percent of the industry last month, versus 46.8 percent for cars.
Consumers took advantage of Memorial Day sales and the weekend following, pushing sales above analysts' expectations, said Jeff Schuster, senior vice president of forecasting for LMC Automotive. Analysts had expected an overall sales dip.
"There are new products out there, and there are deals out there," he said in an interview. "There are some great lease deals out there and that's also helping to push buyers into dealers."
General Motors Co. and Fiat Chrysler Automobiles reported 3 percent and 4 percent sales gains, respectively, while Ford Motor Co. sales fell 1.3 percent. GM and FCA were aided by strong sales of trucks and SUVs, while Ford's sales were off because truck sales were down because of tight supplies of F-150s. ;
GM posted its best May since 2007, with three of four brands increasing sales. Chevy crossovers had best-ever May sales and the Chevrolet Colorado pickup had its best month since launching last year. The automaker's total car sales fell 13 percent year-over-year.
Ford's sport utility sales (up 0.5 percent) were strong, while car sales (down 0.9 percent) struggled but were helped by Mustang's . Truck sales fell 5.1 percent last month as the F-150 ramps up production. Last week, UAW officials reported a frame shortage has led to a slight dip in production at both the Kansas City and Dearborn truck plants. Ford said Tuesday it will shorten its summer shutdowns at some plants to help produce an additional 40,000 F-150s and other utilities.
"America's love affair with the automobile appears over, but Americans are head over heels for utilities," said Michelle Krebs, senior analyst with Autotrader.com.
Ford said its F-150 inventory in May was half of what it was the same time a year ago. Ford said incentive spending was down about $900 as it chose not to participate in Memorial Day sales because of tight inventory. Average transaction prices reached $43,300, a $3,300 increase over a year ago. Ford has a 63-day supply of trucks, and they're sitting on dealer lots for an average of 26 days.
"We feel good about our numbers given those constraints," Mark LaNeve, Ford vice president, U.S. marketing, sales and service, said in call with analysts and reporters. "We've got tight supply, we've got high demand."
LaNeve said he told dealers "May was a low point and it gets better every month from there."
FCA continued its sales gain streak for the 62nd straight month, reporting its best May sales month since 2005 and sold more than 200,000 vehicles for the first time in a month since March 2007. Sales were driven by Jeep and Ram, which each posted sales increases.
Automakers who rely more heavily on cars for sales saw declines such as Hyundai Motor America, which saw sales fall 10.3 percent. Toyota Motor Co. and Nissan Motor Co. each posted small declines, while Volkswagen's sales rose 8 percent, American Honda Motor Co. Inc. saw sales rise 1.3 percent and Kia Motors America posted record monthly sales of 62,433 vehicles in May.
"May proved to be a bit difficult for us as it appears more customers were out looking for big trucks and SUVs than cars," Bob Pradzinski, vice-president of national sales for Hyundai Motor America, said in a statement.
Kelley Blue Book expects total yearly sales will reach 16.9 million vehicles, the most since 2005 when sales reached just shy of 17 million. LMC Automotive is targeting 17 million sales for the year.
"This is a telling start to the summer selling season," Schuster said. "A May showing this kind of strength, really coming off a strong May last year, I think is a strong sign of where the industry is headed through the summer."