The U.S. automotive industry returned to robust levels in May, following the lowest annually adjusted sales of the year in April.
Automakers reported new car and truck sales were up 8.2 percent to 1.44 million vehicles in May, marking the best month of the year only behind March and the best May since 2007.
“Seeing this bounce back in the month of May is good news,” said Jessica Caldwell, a senior analyst at car-shopping site Edmunds.com . “I think it shows the recovery is not linear.”
Many analysts forecasted the industry would come in up 7 percent, following the annualized selling rate in April dropping below 15 million for the first time since October 2012.
Caldwell said it was better to see the numbers lower in April, a historically low month for vehicle sales; rather than May, which is traditionally one of the best months of the year.
Automotive analysts and executives attributed the sales rebound in May to several factors that have been driving sales so far in 2013, including pent-up demand, easy financing and a recovering housing industry, as well as Memorial Day weekend sales and an unseasonably strong demand for pickup trucks.
“The story for the month, which really started out a couple of months ago, but more pronounced this month, was trucks,” said Jesse Toprak, TrueCar.com senior analyst. “Full-size trucks are unseasonably strong and really carrying some of the increases for the automakers.”
Light trucks, including full-size pickups, were up 11 percent last month from a year ago, with full-size pickups outpacing the industry and representing about 12 percent of the overall industry in May, according to officials.
The Detroit Three sold more than 666,000 vehicles, a slightly higher number than some analysts’ expectations of about 657,000 units last month.
The strong truck sales are a great sign for a recovering economy, according to analysts. Many of the buyers are small business owners, replacing their old trucks as business – particularly in the housing industry – continue to pick up.
Ford’s F-Series, as it has for decades, led the industry up 31 percent to 71,604 units sold, leading the Dearborn-based automaker to an 11 percent increase from May 2012. The F-Series had its strongest May sales result since 2005.
“Our customers working in many different industries are telling us that F-150s equipped with EcoBoost provides them with the best combination of fuel economy and capability,” said Ken Czubay, Ford vice president of U.S. marketing, sales and service, during a sales conference call Monday.
Towed by pickups, Ford led all major automakers in the U.S. with its year-over-year sales gains besides Nissan Motor Co., which saw sales skyrocket 25 percent after announcing heavy price cuts earlier in the month.
Also led by pickups, GM experienced its highest overall sales month since September 2008 , up 3 percent to 252,894 vehicles sold; and led by its Ram Truck brand, Chrysler’s sales came in at 166,596 units, an 11 percent increase compared with sales in May 2012.
High truck sales and the recovering market also helped raise the average price of vehicles sold in May, which is historically a month full of incentives.
“We definitely saw sales come in a little bit below expectations last month, but I think now that we see how strong we’re seeing the performance in May,” said Alec Gutierrez, Kelley Blue Book senior market analyst of automotive insights. “It looks as though consumers may have help off their purchase in April knowing May was going to present some nice buying opportunities.”
But consumers weren’t necessarily getting as much money back as they in the past. Compared to May 2012, sales and prices were up, even though incentives were down, according to TrueCar.com . The automotive pricing information and analysis company estimated average transaction price for light vehicles in the U.S. last month was $30,978, up $618 (2.0 percent) over May 2012; even as industry incentives were cut 3 percent compared to May 2012.
Toprak said many automakers and dealers opted for lower annual percentage rates and service programs rather than cash back, which makes for a great month for automakers and dealers.
“That’s a perfect triangle of profitability for automakers: Lower incentives, higher transactions and higher sales,” he said.
Many analyst and industry experts expect U.S. vehicle sales this year to be between 15-15.5 million units . Sales were 14.5 million in 2012.
Last month, Gutierrez said as long as the housing market continues to improve and employment remains somewhat steady, there’s no reason sales should not hit 15.3 million in 2013.
KBB anticipates sales of about 15.3 million units in 2013 compared to Edmunds.com, which recently raised its full-year U.S. sales forecast from 15 million to 15.5 million.
Here’s a look at how other major automakers performed in May 2013 compared to last year:
– Nissan was up 24.7 percent to 114,457 vehicles sold. It recorded the largest year-over-year increase of any of the mainstream automakers.
– Toyota experienced a modest decrease of 2.5 percent to 207,952 vehicles sold.
– Honda’s sales increased 4.5 percent to just over 140,000 vehicles sold.
– Volkswagen declined 1.7 percent to 38,013 vehicles sold.
– Hyundai’s sales were up 2 percent to 68,358 cars sold.
– Kia remained primarily even with sales up 1.1 percent to 52,327 units.
Michael Wayland, mlive.com
