||U.S. Vehicle Sales Advance 8% as Nissan, Ford, Chrysler Set Pace
SAAR Rebounds to 15.3 Million Units on Big Pickups, Healthy Retail Gains
U.S. light vehicle deliveries rose 8 percent in May as the industry rebounded from a disappointing April amid a surge in pickup and compact crossover sales, and a rise in retail demand.
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.
The annualized sales rate, adjusted for seasonal factors, rose to 15.3 million from 14 million a year earlier. That was at the higher end of most forecasts. Prior to the April dip, the annual sales rate had topped 15 million for five straight months, the longest such stretch since the recession.
Healthy demand for large pickups and crossovers, as well as rising retail volumes, drove industry gains last month, automakers said.
Large pickup deliveries rose 25 percent in May and have risen 21 percent for the year. Small crossover sales jumped 24 percent in May and have increased 21 percent this year.
In a positive development for the industry's profit outlook, industry retail sales climbed 9 percent -- 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. 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," Fay said.
The industry's 8 percent rise for the month topped the 7 percent average estimate of 10 analysts polled by Bloomberg.
Overall, light truck deliveries climbed 11 percent last month, more than double the 5-percent gain in car sales. For the year, light vehicle volume has climbed 7 percent, with car demand rising 4 percent and light-truck deliveries advancing 11 percent.
Nissan tallied a May U.S. sales record of 114,457 units, a gain of 25 percent on redesigned models such as the Sentra, Pathfinder and Altima. Volume at the Nissan division rose 31 percent, offsetting a drop of 25 percent in deliveries at the Infiniti brand.
Analysts say Nissan also benefited from price cuts on seven models in early May as well as higher incentives.
"The actual prices were only about four percent lower than April's but the announcement clearly had a a big psychological impact to get sales moving," Edmunds.com senior analyst Jessica Caldwell said.
Nissan hiked incentives 5.8 percent last month, according to Autodata Corp. Kelley Blue Book estimated average transaction prices for Nissan cars and light trucks dropped 0.8 percent last month to $28,284 per unit compared with May 2012.
At Ford, sales rose 14 percent, with car volume up 9 percent, utility vehicle sales advancing 15 percent and truck deliveries jumping 18 percent. The company's retail volume advanced 17 percent and F-Series pickups surged 31 percent to 71,604.
Sales rose 15 percent at the Ford brand and 0.4 percent 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 percent in May, with the company's car sales climbing 16 percent and light truck deliveries advancing 9 percent. 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 percent at the Ram brand, 23 percent at Dodge, and 1 percent at Jeep and Fiat, while volume at the Chrysler brand slipped 2 percent.
Ram pickup deliveries rose 22 percent to 31,672. SUV deliveries were also strong last month, with Jeep Grand Cherokee sales up 21 percent and Durango volume rising 24 percent.
Retail propels Honda
At Honda, May sales volume rose 5 percent, with deliveries at the Honda brand advancing 5 percent, offsetting a 1.5 percent 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 percent gain. While GM's retail sales rose 9 percent, its car sales slipped 6 percent and fleet volume dropped 10 percent.
The company's truck sales climbed 15 percent and crossover demand rose 3 percent. Deliveries of the Chevrolet Silverado and GMC Sierra pickups advanced 22 percent or more.
"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 percent at Cadillac, 7 percent at GMC, and 1 percent at Chevrolet. Buick sales slipped 3 percent.
While demand for Chevrolet's small cars rose, Malibu deliveries slumped 36 percent and have now declined 18 percent 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 percent over May 2012.
Toyota's May sales edged up 3 percent, with volume up 2 percent at the Toyota brand, 4 percent at Lexus and 9 percent at Scion.
For the second consecutive month, sales at the Volkswagen brand slid, with May volume off 1.7 percent, despite an uptick in consumer traffic and closing rates, and new May sales records for Jetta and Passat deliveries. VW Group sales rose 4 percent, however, aided by double-digit gains at Porsche and Audi.
Mazda ended a four-month sales skid with a 19 percent 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.
Pickups, crossovers hot
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. "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 percent, the brand's second-best month ever. Vehicle inventory remains tight, yet Hyundai managed to post a 33 percent increase in Elantra compact sales, CEO John Krafcik said in a posting on Twitter.
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 Springs' 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."
(Source: Advertising Age, 06/03/13)