GM sales drop 18% in May, Ford down 5.9%, FCA up 1.1%

Michael Martinez, and Melissa Burden
DetroitNews

The automotive industry in May hit a speed bump on its road to a second-consecutive record sales year.

Two fewer selling days led to sales declines for most automakers, while General Motors Co. dropped sharply due to a combination of reduced fleet sales and production hitches at numerous plants which cut into supply of popular sellers. Still, auto analysts and company officials expect the industry will end 2016 by selling more new cars and trucks than any other year.

Automakers last month sold 1,536,276 vehicles, down 6 percent from the same month a year ago, according to Autodata Corp.

GM, which sold 240,450 vehicles in May, blamed its drop on two fewer selling days this year versus a year ago, tight supplies of new models and its continued cutback of sales to rental fleets

“The sky is not falling,” said Michelle Krebs, senior analyst with Autotrader.com. “The industry has been selling at an amazing rate for a long time ... so we’re just not seeing the growth. But bear in mind sales remain at very lofty levels and we may well set another new record.”

Detroit’s three automakers had varying May results. GM and Ford Motor Co. sales fell year-over-year, with GM down 18 percent and Ford down 6.1 percent, while Fiat Chrysler Automobiles NV managed to eke out a 1.1 percent gain. GM’s May market share fell to 15.7 percent from 17.9 percent a year ago.

Fiat Chrysler sales again were driven by Jeep. Jeep posted its best monthly sales ever with a 13.7 percent increase. FCA’s Alfa Romeo rose 10 percent while sales of Ram trucks were flat. Fiat fell 18.9 percent, Chrysler fell 18.5 percent and Dodge fell 5.4 percent.

Ford blamed its drop on fewer selling days, and said the month played out as expected.

Despite the overall sales decrease, sales of its profitable F-Series trucks increased 9 percent to 67,412. Ford’s total truck sales rose 8.9 percent, while utility sales rose 0.3 percent and its car sales plummeted 25 percent. Sales of Ford’s Lincoln luxury brand rose 6.9 percent.

Ford said incentive spending on its F-Series trucks is up $1,200 compared to May 2015, when F-150 inventory levels were low. Officials said they expect a strong second half.

“Year-to-date, the industry’s up about 1 percent over a record year,” said Erich Merkle, Ford’s sales analyst. “We still think the industry is quite healthy.”

GM, which sold 240,450 vehicles in May, dropped more than analyst forecasts. GM blamed its drop on a short sales month, tight supplies of new models such as the Chevrolet Cruze and Chevrolet Malibu and its continued cutback of sales to rental fleets. It said its May sales to rental fleets fell 49 percent or nearly 22,000 vehicles from the same month a year ago.

“Current dealer inventories for launch products are about half of what we’d like for launch products, but availability is improving, which sets us up well for the second-half of the year,” Kurt McNeil, GM vice president of sales operations, said in a statement.

GM said Buick sales fell 22.1 percent in May, while Cadillac fell 16 percent, Chevrolet was down 18.6 percent and GMC dropped 14.3 percent. GM’s stock fell on the news, closing at $30.22 a share Wednesday, down nearly 3.4 percent.

While sales were down, the company had high average transaction prices including all-time records for the Chevrolet Silverado and GMC Sierra, respectively at $41,042 and $46,623.

The Detroit automaker had to halt production for two weeks in late April and early May at four North American plants for two weeks due to a supply shortage from earthquakes in Japan. The Spring Hill plant is launching the 2017 Cadillac XT5 crossover and 2017 GMC Acadia; the Fairfax plant is producing the new 2016 Chevrolet Malibu; and Lordstown is launching the new 2016 Chevrolet Cruze.

GM’s Lansing Delta Township Assembly Plant, which builds full-size SUVs, was not producing in May as part of scheduled downtime for retooling. Sales of SUVs the plant builds were down sharply.

Alec Gutierez, a senior analyst with Kelley Blue Book, said GM should be able to make up for the loss of production within about 30 to 60 days.

“If you look at GM’s numbers from an inventory perspective, GM’s running at about 89 days inventory, slightly above the industry average,” he said. “To me, even with that, they have ample inventory.”