Automakers see sales rise as interest rates dipped in May
Several major automakers saw sales increase in May as interest rates dipped to the lowest levels of the year.
The upward trend last month, which included a 2% increase in sales for Fiat Chrysler Automobiles NV and a 3.2% increase for Toyota Motor Corp., represents a bounce-back as rising car prices and bad weather have steered drivers away from dealer lots for most of the winter and spring.
Interest rates for new vehicles averaged 6.1% in May, compared to 6.27% in April, according to data provided by Edmunds. The month-over-month change can likely be attributed to an increase in zero-percent finance deals in May.
Still monthly payments reached record highs — $559 a month on average — as car prices continue to rise.
"These conditions are tough on shopper wallets, no matter how you look at it," said Jeremy Acevedo, an automotive analyst for Edmunds.
Despite strong monthly performances, many automakers' sales are still trending down for the year as the market continues to make hefty swings month-to-month.
"Volatility is a new ingredient in the market, and it's likely to be like this for the rest of the year," said Charlie Chesbrough, an economist for Cox Automotive. "It's hard to know if May's results are an indicator of a robust summer ahead or more volatility ultimately leading into a downward trend for the year."
FCA said last month it is switching to quarterly sales reports. The automaker will continue monthly reports through the second quarter, beginning quarterly dispatches on Oct. 1. General Motors Co. was the first to switch to quarterly sales a year ago, and Ford Motor Co. followed at the beginning of this year.
Sales at FCA are down 3% in the first five months of the year. Ram is the only brand to see sales rise year-over-year, up 24% through May. And Toyota is down 3.1% through May as sedan sales continue to shrink.
FCA's 2% sales increase in May was the automaker's first monthly sales increase since January. The Italian-American automaker's sales were boosted by significant gains for its Ram truck brand, up 29%. That upswing was driven by a 33% increase in pickup sales.
And according to Cox Automotive, FCA leaned heavily into fleet sales last month. Cox data show FCA's fleet sales increased 46% in May versus the same month last year. Fleet sales represented 31% of total sales last month.
"To maintain sales, auto companies are pulling the fleet lever, as FCA clearly did in May," said Zo Rahim, an economist for Cox Automotive.
Jeep sales fell 7% in May, driven down by a 37% decrease in sales of the Renegade and a 27% decrease in sales of the Cherokee. Jeep's flagship Wrangler SUV also saw sales slip 2% in May.
Nissan also saw sales increase slightly in May, up 1.1% on gains for the Versa sedan and Pathfinder SUV. For the year, however, Nissan is down nearly 6%.
Subaru reported a record 63,972 deliveries in May, up 6.4% on a 10% gain for the redesigned Forester SUV and 7.9% increase for the flagship Outback. Subaru's sales are up 5.7% through the first five months of the year.
Honda reported a nearly 5% decrease in May sales, largely driven by a tough month for sedans. Honda cars fell 7.3% while the Acura luxury sedans fell 7.7%.