Car Sales Soften In May

DETROIT (WWJ) Concerns about vehicle shortages battered Japanese carmakers in May, pulling overall car and truck sales down about five per cent.

Toyota sales plunged nearly 30 per cent from May of 2010.  Honda sales were down 16 per cent and Nissan down 9 per cent.

"Some of the hesitation in May that we've seen in sales were caused by the real, as well as the perceived inventory shortages for Japanese brands," says analyst Jesse Toprak of TrueCar.com.

Compared to the Japanese companies, American automakers had a relatively good month.

Ford sales were off by one per cent, GM by 1.2 per cent, but Chrysler lead the domestic auto companies with a ten per cent sales increase.

"Chrysler Group just posted its 14th consecutive month of year-over-year sales gains, confirmation that our 2011 models continue to resonate with consumers," said Fred Diaz, President and CEO – Ram Truck Brand and Lead Executive for U.S. Sales, in a statement. "Our retail sales were up 27 percent in May, driven in large part by our new models. Ram pickup trucks and all of our Jeep brand models posted sales increases in May, despite high, fluctuating gas prices."

Chrysler was helped because its new products are starting to hit showrooms.  It was hurt because it didn't have a highly fuel efficient small car.  Ford's Focus and Fiesta had good months.  The Chevy Cruze posted record sales.

"Clearly what consumers are telling us is they are looking for fuel efficient cars and crossovers," said GM sales operations manager Don Johnson.  The Chevy Cruze and Equinox lead the way, along with strong Buick sales.

"We again this month will pick up total market share," said Johnson, who expects some of the Japanese manufacturers to lose share because of product shortages.

Analysts say GM remains on solid footing.

"The fact that GM retail sales are up is a positive in this economy full of mixed signals," says Edmunds.com analyst Michelle Krebs. "GM fleet sales make up about 30 percent of total sales, but GM claims it is intentionally minimizing that side of the business. Thanks to new or relatively new offerings like the Chevy Cruze and Chevy Equinox, General Motors is capitalizing on the widespread shift to more fuel-efficient vehicles in a way it hasn't during past periods of high gas prices. Buick has been an amazing comeback story, selling 24 percent more vehicles than May last year -- mostly Regal and LaCrosse models."

Ford was also glad to see stability in a month when so many automakers saw their sales fall.

"We achieved some of our highest market shares that we've seen in recent years in the month of May.  Not only nationally, but we haven't seen shares in California as high as we did in May in six years," said Ford sales analysis manager George Pipas.

Ford's retail share was up 5 per cent.  GM's retail share was up nine per cent.

A number of automakers had strong months.  Jaguar sales were up 32 per cent, Volkswagen 28 per cent.  Mitsubishi sales rose nearly 60 per cent.

The average transaction price of vehicles also rose in May—as incentives declined, and buyers loaded up small cars, approaching thirty thousand dollars, a new record.

"What happened in May was a combination of extremely low incentive spending, and consumers preferring to buy much more highly contented vehicles," said TrueCar.com's Jesse Toprak.

Many analysts believe that the run up in prices is temporary in nature, and will ease at the end of the summer.

"If you don't have to buy, wait until fall," said Edmunds.com CEO Jeremy Anwyl.  "If you lease a car, extend it."

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