Auto Makers Posted Strong US May Sales – Wall Street Journal

Posted: Tuesday, June 02, 2015

A Fiat Chrysler 2015 Dodge Viper vehicle is checked by robots on the production line at an assembly plant in Detroit in May.

Cheap financing and a spate of Memorial Day promotions led to another strong month for U.S. auto sales in May, running at a annualize pace to achieve the highest volume since 2001.

Several top car makers logged better-than-expected results for the month, propelled by demand for sport-utility vehicles and trucks that remains robust despite rising gasoline prices. Luxury-car buyers also are driving sales gains using low-price leases and low-interest auto loans that extend several years to trade up to pricier vehicles.

May’s seasonally adjusted annual sales rate, or SAAR, was 17.8 million vehicles, the highest recorded since July 2005, according to researcher Autodata Corp. Absolute sales growth was up a modest 1.6% over last year because there was one less selling day than in May 2014.

General Motors Co.


posted a surprise 3% increase last month while Fiat Chrysler Automobiles


NV said its U.S. sales rose 4%, its best May sales gain in a decade, mostly from higher Jeep sales. Ford also did better than expected, but with supplies still tight for its top-selling F-150 pickup truck, its overall U.S. sales were down 1% last month.

Honda Motor Co.


’s U.S. sales grew 1.3%, Toyota Motor Corp.


’s sales were flat compared with last year, and Nissan Motor Co.


slipped nearly 1%. Volkswagen AG


, which recently has struggledin the U.S., posted a 9% sales gain including deliveries of its Audi luxury cars.

Mercedes-Benz’s U.S. division reported its May sales rose 11% and BMW AG


said its U.S. sales grew 5% last month. Sales at Hyundai Motor Co.


, whose U.S. lineup is heavy on small cars and sedans, slid 8% as more customers shifted to buying large trucks and SUVs.

“It may turn out that Memorial Day promotions worked better than anticipated,” said Michelle Krebs, a senior analyst for car-shopping firm AutoTrader. “Even though overall incentive spending by auto makers was relatively flat, the sales promotions were loud.”

The selling pace indicates auto demand is at its strongest level in 2015 ahead of the traditionally hot summer selling season—and just ahead of union wage negotiations for the Detroit Three auto makers.

The United Auto Workers union, which represents about 140,000 GM, Ford and Fiat Chrysler employees, soon will begin negotiating a new contract. After years of being barred from striking GM and Fiat Chrysler as a condition of government-sponsored bailouts, the UAW this year is no longer subject to that restriction leading local officials to draw up strike plans and encourage members to sock away money in case there is a work stoppage.

A UAW spokesman in Detroit declined to comment on the locals’ strike preparations. Ford, Fiat Chrysler and GM also declined to comment.

Higher selling prices on Ford’s new F-series truck helped drive the Dearborn, Mich., company’s average transaction price up $2,300 a vehicle in May compared with last year. Ford said on Tuesday it would boost production on its trucks and SUVs through the summer at six assembly plants by shortening the normal seasonal shutdown from two weeks to one.

We don’t see any reason for this to end.

—Sid DeBoer, chairman of Lithia Motors

Fiat Chrysler is benefiting from higher Jeep sales, up 13% in May, and GM’s truck and SUV sales are driving most of the company’s retail growth for the month. Sales of its Silverado pickup were up 10% last month, while demand for its midsize Colorado pickup is outpacing GM’s ability to build them, despite adding another shift to its plant in March, the company said.

Car pricing firm Kelley Blue Book estimates transaction prices for the industry grew 4.3% to $33,363 a vehicle in May compared with last year. The average new-vehicle loan term was 67.9 months in May, the highest ever, according to, a car-shopping website.

“We don’t see any reason for this to end,” said Sid DeBoer, chairman of Lithia Motors Inc.,


a publicly traded dealership chain. “Interest rates would have to go up remarkably.”

Write to Christina Rogers at and Chelsey Dulaney at


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