GM, Ford sales gains outpace Toyota

NEW YORK (CNNMoney.com) -- Major automakers all reported large gains in May sales, with industry totals helped greatly by a spike in sales to business customers rather than to individual consumers.

Overall U.S. auto sales increased 19% compared to the very weak sales of a year ago, according to sales tracker Autodata. That was a bit higher than even the most bullish forecasts.

But much of the better-than-expected results came from the fleet sales, not more profitable retail sales, a sign that even in an improving economic environment many consumers remain hesitant to make a big-ticket purchase such as an automobile.

"Even though we've seen stability in the marketplace, we didn't see a robust recovery that we would have liked," said Jesse Toprak, president of industry trends at TrueCar.com. "Incentive offers are helping to bring some customers back, but it's not a mad rush back to dealerships."

The three Detroit automakers all posted strong gains compared to a year earlier, when General Motors was on the cusp of bankruptcy and Chrysler Group was in bankruptcy. GM and Ford Motor (F, Fortune 500) each reported that 37% of their May sales came from fleet sales. Chrysler does not detail its fleet sales.

Toyota Motor, the No. 3 automaker in terms of U.S. sales, reported a far more modest gain in sales, falling short of forecasts. As is typical, Toyota sells a far lower percentage of its vehicles to fleet customers than its U.S. rivals. But other top Asian automakers posted gains near or above those of the domestic manufacturers.

The seasonally adjusted annual sales rate came in at 11.6 million, the second best monthly sales pace since August 2008, right before Lehman Brothers bankruptcy hit the economy. Only August of last year, when the government's Cash for Clunkers program spurred sales, topped May's sales pace.

GM, the No. 1 U.S. automaker reported a 17% gain in sales compared to a year ago, led by a 32% rise in sales at the four brands it still markets: Chevrolet, Buick, GMC and Cadillac.

Sales of the brands GM shed as part of its bankruptcy filing were off 94% from a year ago, although those brands now make up less than 1% of the company's U.S. sales. It has less than 1,500 of those brands' vehicles left in inventory, most of them Hummers.

Ford Motor (F, Fortune 500) reported a 23% rise in sales at the three brands it retains: Ford, Lincoln and Mercury. The company is in the process of closing the sale of its Volvo brand to Chinese automaker Geely. It also got about 37% of its sales from fleet sales, but it said much of those sales were truck sales to commercial customers, rather than car sales to rental companies.

Sales at the Ford brand rose 28% compared to a year ago, but sales at the Mercury brand were off 10% while Lincoln sales fell 11%.

Ford also announced Wednesday that it will discontinue its Mercury brand in the fourth quarter of this year, shifting its few remaining vehicles to Lincoln. The move had been widely reported for the past week, but George Pipas, director of sales analysis for Ford, said there was no drop-off in Mercury sales tied to the timing of those reports and did not think speculation about the brand's future caused the lower sales.

Ford's overall sales were good enough for it to again raise its second-quarter production target by 2%, or 15,000 vehicles, from its previous estimate, putting it at 640,000 vehicles. It also gave its first look at third-quarter production, putting it at 570,000 vehicles, which would be 16% above year-ago levels.

Chrysler Group, which essentially shut its plants while it worked in bankruptcy last May, posted a 33% jump in sales compared to that period.

GM's and Chrysler's sales easily exceeded forecasts from sales trackers Edmunds.com and TrueCar.com, while Ford topped TrueCar's forecast and was roughly in line with Edmunds' estimate.

Toyota Motor (TM) reported only a 7% rise overall, short of forecasts for a 9% gain. Its 4% gain for the Toyota brand was bolstered by a 31% increase for the luxury Lexus brand.

Toyota has been hit by problems caused by massive recalls and production shutdowns this year. Comparisons for Toyota are more difficult to the year-ago period since many buyers were shunning GM and Chrysler a year ago because of the bankruptcy at those automakers at that time.

But executives said Toyota was helped by its strongest sales weekend of the year over the Memorial Day holiday.

Toyota has been forced to be more aggressive than normal on offers to consumers since the recalls. It upped some of the incentive packages Wednesday. It also said it will roll out a new marketing campaign focused on vehicle safety.

"The market is very competitive and we're going to do what we need to do to remain competitive," said Bob Carter, Toyota general manager, in a call with reporters. He pointed to strong retail sales for the Toyota brand, which he said outpaced any of the domestic automakers' brands once again.

"We're fighting tooth and nail for the retail consumers, but we're not going to chase the rental car business," he said.

But the other major Asian automakers posted stronger gains than Toyota Motor. Japanese rival Honda Motor posted a 19% increase that was also a little short of forecasts, while Nissan sales rose 24%, beating estimates.

Korean automaker Hyundai Motor, which sells under both the Hyundai and Kia brands here, posted a combined 28% increase in sales. That was short of TrueCar's forecast but in line with Edmunds.