May Auto Sales Soar - Just Don't Expect the Same in June

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DETROIT ( TheStreet) -- Auto sales in May were surprisingly strong as a fifth weekend provided more selling opportunities and recalls didn't seem to bother consumers.

May sales showed "positive momentum for the economy in the current quarter and into the second half," said Ford economist Emily Kolinski Morris on the Ford sales call. She noted that buyer motivation may be shifting. "We are getting into a little bit more discretionary purchases on the part of consumers," she said, and moving away from the need to replace aging vehicles.

Auto sales are a particularly useful economic indicator: They measure major purchases, they are reported quickly and they are not revised.

GM said May sales rose a surprisingly strong 13%, while Chrysler sales rose 17%. Overall sales rose 9% to 10%, Ford estimated. Ford sales rose just 3%, but Ford pointed to strong trends for the F-150, the best-selling U.S. vehicle. The F-150 average transaction price was the highest in the segment and F-150 incentives were lowest among the top pickup trucks.

Toyota said sales rose 17%. "Industry sales in May soared as consumer confidence improved and demand for new vehicles continued to strengthen," said Bill Fay, Toyota division group vice president and general manager, in a prepared statement.

Nissan sales rose 19%. "Nissan started the month with strong momentum and rode an outstanding Memorial Day weekend to capture our best May sales performance in the history of Nissan in the U.S.," said Fred Diaz, senior vice president, Nissan sales & marketing and operations, in a prepared statement. Volkswagen sales fell 11.5%.

Nearly every expert had estimated the seasonally adjusted annualized sales rate would be 16.1 million, but it came in at 16.5 million to 16.9 million. A factor was that end-of-the-month sales, on Memorial Day weekend and on May 31, were particularly strong. Sterne Agee analyst Michael Ward estimated 16.6 million, the strongest level since February 2007.

The first two-thirds of the month were strong and the final third was "even stronger," said John Felice, Ford vice president for U.S. marketing, sales and service. "We had five weekends in the month of May; the month set up very well for overall industry performance."

Don't look for results to be quite so good in June, Felice cautioned. "June volume may be down because of the way the weekends (fall)," he said.

As for recalls, Felice responded to a reporter's question on the topic by saying: "You're seeing an elevated sensitivity in the industry, but haven't seen it come through to any impact on (sales) performance."


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Written by Ted Reed in Charlotte, N.C.

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