May auto sales hit eye-popping 17.8 million sales pace – Detroit Free Press
New car and truck sales exceeded already lofty expectations in May as easy credit, longer loans and Memorial Day weekend promotions attracted strong showroom traffic.
The industry’s annual selling rate reached 17.8 million, the strongest monthly pace since July 2005, according to Autodata Corp.
It is an eye-popping level after a dramatic decade that saw a deep recession and the bankruptcies of General Motors and Chrysler before the long road back to recovery.
“We’re expecting this year to be the sixth year over year of growth,” said Eric Lyman,Truecar vice president of industry insights. “This is the first time we’ll see six consecutive years of growth ever in the industry or at least back to when our data set begins in 1931.”
Automotive News reported that it did happen in the 1920’s.
With continued low gasoline prices, Americans are continuing to migrate to pickup trucks, SUVs and larger crossover vehicles, which is pushing up the selling price. Kelley Blue Book reported that the average new vehicle sold in May for $33,363, down slightly from April, but 4.3% higher than May 2014.
Automakers with a strong light truck lineup were rewarded.
Fiat Chrysler Automobiles sales rose 4% from a year earlier, General Motors was up 3% while Ford saw its sales fall 1% because it did not have enough new trucks in showrooms across the country.
Car-heavy automakers continue to be affected by the surge to trucks and crossovers. Toyota’s sales slipped 0.3% as a 10% increase at its Lexus luxury brand nearly offset a 1.6% decline at Toyota division. Honda saw sales increase 1% and Nissan reported a drop of almost 1% which would have been worse if not for record sales of its smaller lineup of trucks and crossovers. Hyundai was down 10% while sister Kia was up 4%.
Volkswagen’s U.S. sales rose 8%, helped by a strong start of its new Golf family of small vehicles, which were up 252% from May 2014.
GMC had the strongest sales month among General Motors’ four brands with a gain of almost 13%. Sales of the GMC Acadia were up 67% while sister model Buick Enclave was up 23% and Chevrolet Traverse sales nudged up 2% as the mid-size crossover vehicles continues to attract more buyers.
“Chevrolet has the hot hand in the pickup market thanks to our three-truck strategy,” said Kurt McNeil, General Motors’ U.S. vice president of sales. “Our market share is growing and our strategy is to retain these customers with the best overall ownership experience.”
In the pickup segment, sales of the Chevrolet Silverado were up 11% to 51,602. GMC Sierra sales rose 4% to 18,977, and the Ram pickup increased 8% to 39,952.
Pickups were in short supply for Ford which saw F-Series drop by almost 10%, largely because stocks of the new 2015 F-150 were only half the normal inventory as the Kansas City, Mo, ramps up to full production speed this quarter.
Ford sold 250,813 vehicles last month, with both total and retail sales falling. Sales of its Lincoln luxury brand rose 4%.
Mark LaNeve, Ford vice president, U.S. marketing, sales and service, said he told dealers that May was the low point in terms of pickup inventory — the truck is only on lots for 26 days — and the supply will improve with each month.
“We began the month at half the inventory we normally carry,” LaNeve said, making it impossible to supply 3,000 dealers with all the truck’s configurations. “They just don’t have a representative sample of inventory of all the cab types which limits opportunities in the market.”
LaNeve said Ford chose not to match Memorial Day deals because of the short supply and he looks forward to the day when the automaker has full availability of its key products. The two plants that make the F-150 will only be shut for a single week this summer, instead of the normal two-week vacation, to increase production.
The sales chief said the average transaction price for the 2015 F-150 is $43,300 which is $3,300 higher than a year ago and up $600 from April.
Trucks and crossovers also helped Fiat Chrysler continue its winning sales streak of 62 consecutive months of improved sales from the prior year.
FCA’s strong month was led by increases of 32% and 13% by its Chrysler and Jeep brands, respectively. Ram sold 12% more trucks than a year ago.
“Our Jeep brand continues to set records with its best monthly sales ever in May,” said Reid Bigland, head of FCA’s U.S. sales. Sales of the Jeep Patriot rose 31% and sales of the Jeep Cherokee were up 23%.
Sales of the Chrysler 200 soared 537% from a year earlier when production on the redesigned model was just beginning. But the other car brands, Dodge and Fiat ,fell 22% and 19%, respectively.
Credit continues to flow freely and many lenders are offering 0% financing to credit-worthy customers. Edmunds.com reported Monday that 9.5% of all new vehicles sold in May were financed with 0% loans.
Earlier this week Experian reported that the average new vehicle loan is 67 months, the longest ever. The same report found leasing accounted for 31.5% of all new vehicle transactions in the first quarter of 2015.
“I think automakers are going to be careful about letting that go very much higher,” said Michelle Krebs, senior analyst with Autotrader.com. “While the market seems to be able to absorb it now this is a cyclical business.”
Contact Greg Gardner: 313-222-8762 or firstname.lastname@example.org. Follow him on Twitter @GregGardner12. Nathan Bomey contributed.