U.S. Auto Sales Surge in May

US auto sales surge in MayU.S. auto sales surged in May, confirming that the cold winter had more to do with damping demand than a dip in consumer confidence.

Source: Source: WSJ | Published on June 3, 2014

cost of automobiles, trucks

Auto sales have consistently been a positive sign in the economy while other economic indicators have fluctuated. Sales in January and February fell below expectations and auto makers blamed the results on the weather, an explanation used to describe the slow economic growth in the U.S. overall in the first quarter.

However, sales picked up in March and April, and now with results from several of the largest auto makers reporting sales Tuesday, it was clear May results were strong.

General Motors Co., the largest U.S. auto seller, said sales jumped 13% to 284,694, easily topping expectations even as the company contends with the fallout from a steady flow of recalls over safety concerns. The Detroit auto maker said the seasonally adjusted annualized rate for sales would hit 16.5 million, the highest of the year.

Chrysler Group LLC posted 17% sales growth in May, while Toyota Motor Corp. also said sales jumped 17%. Nissan Motor Co. said sales rose 19%, another strong month for the Japanese company.

"Our Jeep sport-utility vehicles and Ram pickups continued to do well in May as our dealers reported brisk May sales over five weekends and the Memorial Day holiday," Reid Bigland, head of Chrysler's U.S. sales, said in a news release.

Chrysler's Jeep and Ram brands have supported its results lately. Sales of the Jeep brand rose 58%, backed by growth in its Compass, Cherokee and Wrangler models, while the Ram brand's sales rose 19%.

Ford Motor Co. said sales rose 3% as the company tried to maintain inventory on its F-150 pickup trucks and cut incentives. Ford also said it expects to lose market share in 2014 due to extended shutdowns at truck plants required to install new equipment for the incoming F-150.

Due to the shutdowns-a total of 10 weeks for its Dearborn, Mich., truck plant and three weeks for its Kansas City plant-Ford will build about 90,000 fewer trucks than normal.

"We aren't going to be overly aggressive in the market," said John Felice, vice president of sales for Ford North America. "The most important thing is to not get too anxious and try to sell more trucks" by using higher incentives.

While auto makers were broadly projected to report year-over-year sales growth for the month, observers are paying particularly close attention to GM's figures. Analysts had expected GM to post sales growth for the month despite the recalls. Auto researcher Kelley Blue Book and automotive-information provider Edmunds.com had both expected about 7% year-over-year growth from GM.

"The momentum we generated in April carried into May, with all four brands performing well in a growing economy and 17 vehicle lines posting double-digit retail sales increases or better," said Kurt McNeil, vice president of GM's U.S. sales operations.

Although Ford said it had its best May sales since 2004, it gave up market share to many of the other auto makers. The company said it sold 254,084 total vehicles in May, an increase of 3% from a year ago, bolstered mainly by 9.5% growth in sales of its utilities vehicles. Car sales rose 1.7%, while truck sales declined 0.8%.

Nissan said it sold 135,934 vehicles last month, up 19% from a year ago. The core Nissan division enjoyed an 18% increase to 125,558 vehicles, which the company called a record for the month, while the smaller luxury division, Infiniti, posted a 31% gain to 10,376 vehicles.

Kelley Blue Book and Edmunds were both expecting Chrysler and Nissan to log the biggest sales jumps in May.

May had 27 selling days, one more than last year's period.