Auto Sales Defy Stock Market Gloom
DETROIT (TheStreet) - May auto sales data does not support the thesis, apparently guiding investors, that the economy is in decline.
Rather, major automakers all posted double-digit percentage sales gains in May, paced by Toyota's (TM) 87% improvement over the same month a year earlier, when the tsunami that struck Japan created inventory shortages.
Meanwhile, monthly sales at Ford(F) gained 13%. GM(GM) reported its best monthly sales total in 33 months, rising 11% year-over-year, even though it shed brands in bankruptcy. Sales at Chrysler gained 30%, Volkswagen 28% and Nissan gained 21%.
"Auto sales have been and continue to be a bright spot for the U.S. economy," said Don Johnson, vice president of US sales operations, on GM's monthly sales call. He said May industry sales bested every month in 2011.
On the Ford call, economist Jenny Lin said that disappointing May employment numbers represented "a soft patch" and noted that "May and June could be a pretty noisy time because graduation season has come," pushing students into the labor force. She noted that May was the ninth consecutive month of rising consumer sentiment and brought both encouraging signs in the housing market and declining gas prices.
Meanwhile, GM economist Yingzi Su attributed the disappointing numbers to "payback from the previous December to February period," when job growth was unexpectedly strong, and said she too expected a soft patch in May and possibly in June.
Both Lin and Su projected full-year GDP growth of 2% to 2.5%. The May employment report "is consistent" with that estimate, Lin said.
Ken Czubay, Ford's always optimistic head of U.S. sales, said "Dealers are telling me they had excellent traffic" over the Memorial Day weekend. Like most in the auto industry, Czubay said pent-up demand is driving the sales gains. "I do not believe the employment data in and of itself will have an impact," he said.