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Auto sales in overdrive
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June 2, 1999: 7:38 p.m. ET
Consumer confidence pushes sales toward record levels, but GM stalls
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NEW YORK (CNNfn) - Americans took their good feelings about the economy for a joy ride in May as they bought autos at a near record pace, according to figures released Wednesday.
However, General Motors, the nation's No. 1 automaker, was stuck in neutral with older models and a shortage of trucks. For most other automakers, May was indeed a merry month.
"No matter how you slice it," said David Healy, an analyst at Burnham Securities, "it's one of the best months ever."
Healy said a possible rise in interest rates, which many economists are expecting, might slow the buying drive in the long haul, "but it ain't going to affect car sales soon."
He noted that "GM has been losing market share this year, and May is more of the same."
Michael Luckey, president of Luckey Consulting Group, said May's seasonally adjusted annual selling rate was about 17.1 million units, one of the strongest months since the nation came out of the last recession in 1991.
"This is the third month in the last six months where the rate was 17 million or above," he said. "Anything above 16 million is a very strong month."
Luckey noted that in spite of the strong economy, automakers are still offering incentives.
"It's like putting gas on a bonfire," he said, "the fire gets bigger."
Ford Motor Co.
Ford Motor Co. (F) saw its 10th consecutive monthly sales increase, with U.S. consumers purchasing or leasing 395,179 cars and trucks from Ford, Lincoln-Mercury, Jaguar and Volvo dealers, an 11 percent increase from last year.
Passenger car sales totaled 168,580, up 19 percent from a year ago, while truck sales were a record 226,599, up 6 percent. This was the 13th month in a row that Ford set a monthly sales record.
Bob Rewey, Ford's group vice president for marketing, sales and service, described May as a "blockbuster sales month" for both Ford and the industry.
"Consumers are responding to strong economic fundamentals -- growth in jobs and income, low inflation and interest rates, as well as innovative products," Rewey said. "We believe these fundamentals will keep U.S. auto sales healthy for the rest of 1999."
Ford spokesman George Pipas said Ford's sales benefited from a huge Memorial Day push that was not anticipated by the company.
Ford closed Wednesday down 1 to 56-1/2.
DaimlerChrysler
DaimlerChrysler (DCX) reported that May U.S. light vehicle sales for its American makes hit a new monthly record, rising 6 percent to 264,732. Car sales were up 1 percent to 74,548, while sales of pickup trucks, minivans and sport utility vehicles jumped 8 percent to 190,184.
The totals don't include Mercedes-Benz U.S. sales of 16,663 in the month.
Jim Holden, DaimlerChrsyler's vice president for sales and marketing, said the company is gaining U.S. market share and will have record U.S. sales this year.
"Based on the strength of the product we've got there now, we expect to set a full-year record within the Chrysler brands and should gain market share as we go forward," Holden told reporters in a telephone conference call. "It's pretty clear at this point that 1999 calendar year will be a record automotive year in the U.S."
DaimlerChrysler was up 3/8 at 86-9/16.
General Motors
General Motors Corp. (GM) did not fare as well. The company saw its U.S. car and light truck sales fall 5 percent in May, slightly more than analysts had expected.
GM had total light vehicle sales of 458,747 in May. Car sales slumped 7.5 percent to 236,929. Pickup trucks, minivans and sport utility vehicles slipped 2.1 percent to 221,818,
GM officials blamed the decline on strong sales a year ago when there was a flurry of spring rebates and other incentives, even though cross-town rivals Ford and DaimlerChrysler also added incentives in May 1998.
Donald DeVeaux, GM's director of North American market analysis, said the company will look into adding incentives on its full-size sport utility vehicles, whose sales tumbled 19 percent from last year. The SUVs, some of GM's most profitable vehicles, had a $1,000 rebate a year ago.
GM's full-size pickup trucks, which are reaching targeted inventory levels, accounted for more than 76,000 sales, a 7.8 percent increase over May 1998, and the best May since 1978. Total pickup truck sales rose 6 percent, also the best May in 21 years.
But key truck products showed declines. Sales of the Tahoe full-size sport utility fell 37.6 percent. Suburban SUV sales were down 2.6 percent and the Blazer compact SUV was down 9.1 percent.
Car sales at GM's core Chevrolet division plunged 25 percent. The Cavalier small car, Chevrolet's best-selling model, showed a 22.3 percent decline.
General Motors was down 5/8 at 70-1/16.
And from the overseas desk…
Toyota, Japan's No. 1 automaker, had its best month ever with U.S. sales of 142,625, an increase of 4.7 percent. The increase was led by a 15.8 percent rise in sport utility vehicles and minivans, offsetting a 1.1 percent drop in car sales.
Honda's U.S. sales hit 98,158, a new May record and up 6 percent. Honda car sales were flat, while trucks, boosted by the Odyssey minivan and CR-V small sport utility, rose 42.6 percent.
German automaker Volkswagen had its a 56 percent sales jump to 29,704, its best May since 1979.
-- from staff and wire reports
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