Advertisement
Find a Car
Go!

May Sales Fare a Little Better


Carmakers are expecting slightly better sales in the second half of the year after keeping sales alive with heavy dose of incentives during the first half of the year. Sales came in slightly stronger than expected in May, holding steady at an annualized pace of 16.1 million thanks to a strong showing by Japanese automakers such as Toyota, Honda and Nissan.

General Motors finally saw its huge investment in incentives pay off last month as its sales increased by 4.1 percent. Meanwhile, Ford Motor Co. dropped 1.8 percent as sales to fleet customers tailed off and the Chrysler Group lost more ground as its sales fell 3.3 percent.

Hyundai saw its sale increase 7.5 percent and BMW reported a 9 percent sales increase; Mercedes-Benz boosted its sales by 6 percent, Audi sales jumped 1.9 percent and Porsche was the big German winner as its sales surged 34 percent in the wake of the introduction of the Cayenne.

Toyota, Honda running hard

Toyota Motor Sales U.S.A. Inc. reported its best-ever sales month in 46 years of business in the U.S. with total May sales of 186,764 vehicles, an increase of 6.1 percent. Year-to-date, Toyota sales now stand at 747,641, up 2.1 percent over the same period last year; that leaves the Japanese carmaker only 250,00 units short of the one million unit mark with only half the year gone.

“Emerging signs of a strengthening economy, a much anticipated tax break and a stock market showing hints of a comeback combined to fuel industry sales in May,” said Jim Press, Toyota Motor Sales executive vice president and COO. “These positive signs will probably result in revised second-half industry sales forecasts,” he predicted.

Honda reported its sales, including totals from its Acura line, increased 18 percent last month on the basis of strong sales across its entire lineup. “American Honda continues to grow by expanding into new light truck markets while boosting its momentum in automobiles with class-leading vehicles like the Honda Accord and Acura TSX,” said Dick Colliver, executive vice president of American Honda Motor Co., Inc. “Even in a tough market, both Honda and Acura Divisions are showing remarkable success,” he said.

Both Honda and Toyota clearly benefited from the aggressive pricing, said Paul Ballew, GM general director of market analysis. Toyota, for example, managed to reverse a months-long slide in the sales of its full-size pickup trucks by offering no-interest loans of up to 60 months. Sales of the Tundra increased fifteen percent in May as the incentives took hold.

“I really think that’s incentives are only one part of the pricing equation,” added Ballew.

Playing the game

The reality is that all of the manufacturers have taken steps to reduce prices for consumers. And while the big guys are doing well, the incentives game has squeezed other Japanese brands. Mitsubishi sales dropped 31 percent and Suzuki fell 16 percent during May.

Overall, however, carmakers were pleased with May sales number.

“Although the U.S. economy is still in a period of slow growth, we believe the tax cut package and higher consumer spending will help to accelerate economic growth before the year is over,” Jim O’Connor, Ford group vice president for North America marketing, sales, and service, said.

“May sales were stronger than most forecasts,” added O’Connor. “About 1.6 million customers purchased a new car or truck in May — the highest for any month since August 2002. After that, you have to go back to October 2001 to find a higher sales month,” he said.

Ballew said sales have been quite as robust as expected since the economic recovery is taking longer than anticipated to pick up momentum. Nevertheless, GM expects the second half of the year to be slightly better than first half and the first part of 2004.

Officials from the Chrysler Group, which has been hurt in the latest incentive battles, insisted that better days lie ahead. “We are looking for the market to gain momentum this summer,” said Gary Dilts, Chrysler Group senior vice president - sales.

Analysts remain nervous about the large inventories of unsold vehicles now being carried by the domestic manufacturers. GM’s Ballew, however, refused to get drawn into a discussion of inventory levels during the conference call except to note that for the past couple of years, GM hasn’t had enough inventory on hand by the end of the fourth quarter.

Advertisement
 
© 2014 The Car Connection. All Rights Reserved. The Car Connection is published by High Gear Media. Stock photography by izmo, Inc. Send us feedback.