Auto sales slowed in May as shoppers delayed
Buyers held off on purchases as prices rose and discounts disappeared.
Auto sales slumped last month as shoppers balked at rising prices and car shortages.
Gas prices were still through the roof in May, causing some people to trade in for smaller cars. But car prices rose while incentives disappeared, and that, combined with a supply shortage after the Japan earthquake, sent many shoppers to the sidelines.
Total vehicle deliveries fell 8.3% from April and 3.7% from last May, adding to concerns that the economy is slowing further. Some experts are telling people to delay car purchases for a few months as discounts dry up. "If you don't have to buy, wait until fall. If you lease a car, extend it," the chief of Edmunds.com told The Associated Press.
Automakers are releasing their May sales data Wednesday, and one of the first ones out of the gate, General Motors (GM), said sales dropped 1.2% to 221,192. That disappointed analysts, who had expected sales of between 225,000 and 242,000, Reuters reported. GM investors were also disappointed. The stock closed down nearly 5% to $30.23.
Automakers continued to see a trend toward crossovers and smaller cars. One of GM's top sellers was the Chevrolet Cruze compact. GM's retail sales rose 9%, but fleet sales fell 16% as the carmaker backed off of low-profit sales to fleet buyers.
GM executives estimate the annualized industry sales rate for May at 12 million to 12.1 million vehicles, while economists expected 12.6 million. As it turns out, both groups were optimistic. On a seasonally adjusted basis, light-vehicle sales came in at 11.79 million units, up from 11.64 million units a year earlier, according to Autodata.
It was be the first time since February that the rate has fallen below 13 million.
Ford (F) said that its sales were flat at 192,102 and that small cars such as the Fiesta subcompact were again the stars of the show. Truck sales plunged 11%, but the F-Series remained the best-selling vehicle in the country, with 42,399 sold.
Ford reported a 5% gain in retail sales, while fleet sales -- to car rental companies and other large customers -- fell 8%. Sales slowed among government and rental buyers in particular. Ford's shares fell 4% in afternoon trading but closed flat at $14.22.
Ford has raised prices by an average of $375 per vehicle this year, Automotive News reports. All U.S. automakers combined have raised prices about 1% as costs for steel, rubber and other materials have increased.
Shortages also affected the month's sales. Research firm IHS Automotive says the U.S. car inventory is down from normal levels by about 400,000, AP reports. That's a significant number. Toyota (TM) started May with only about 10 sales days' worth of Prius hybrids. A 60-day supply is the normal target.
Toyota was hit hard in the month, selling only 108,387 vehicles -- a 27.9% drop from a year earlier. Passenger cars fared the worst, falling 32.2%, while light-truck sales were down 17.3%. The company's ADR shares closed down 2% to $81.50.
Toyota said it struggled with production uncertainties in the month, but said that will likely change soon. This month, Toyota will see full production of eight of its 12 vehicles built in North America.
Chrysler fared better than its larger rivals, reporting a 10% increase in May sales to 115,363. Chrysler's car sales fell 4%, but its truck sales -- led by the Ram line -- rose 17%.
Honda suffered a 16.1% drop, with 90,773 units sold, and said the results were about what it expected, considering the parts and production shortages after the Japan earthquake. Sales will rebound as North American plants return to full production for most models in August, the company added.
The Civic was Honda's best-seller, with 18,341 sold in May. The Accord wasn't far behind, with 13,185 units sold.
Nissan had a disappointing month, with sales falling 9.1% to 76,148 vehicles. Truck sales fell 13.1%, dragging down the total even as sales of the automaker's top model, the Altima, gained 16.3% to 25,525.
Hyundai and Kia Motors, however, reported spectacular numbers for May. Hyundai said it had a record May, with sales up 21% to 59,214 units. It was the fifth month in a row that Hyundai set a monthly sales record. Hyundai said its fuel-efficient cars were very attractive to drivers in this economy.
Kia Motors saw a 53.4% sales increase to 48,212 vehicles, with the best-selling Sorrento soaring 46% to 11,936 units.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
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