The Big Three Automakers All Beat Sales Estimates for May

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Why Americans Are Buying More Trucks Than Cars

General Motors Co. and Fiat Chrysler reported bigger sales increases than analysts had anticipated as Memorial Day promotions drew Americans to dealerships, signaling that the U.S. economy is gathering momentum after the winter doldrums.

Fiat Chrysler Automobiles NV said U.S. sales last month rose 4 percent from a year earlier for its best May in a decade, GM’s gained 3 percent and Ford Motor Co.’s slipped 1.3 percent, a smaller decline than analysts projected. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. also posted better-than-expected results.

An improved job market has consumers headed to showrooms and paying higher prices by taking out longer loans. Relatively cheap gasoline continues to push sales of pickups and crossover sport utility vehicles. U.S. auto sales rose 1.6 percent to 1.64 million last month, according to researcher Autodata Corp., beating analysts’ estimates for a 1.1 percent decline.

“Memorial Day sales promotions probably were very effective,” said Michelle Krebs, senior analyst with AutoTrader.com. “But there are also so many strong elements in place. There are still old vehicles on the road, gas prices are down, employment is strong and there is plenty of pent-up demand.”

The annualized pace of sales, adjusted for seasonal trends, rose to 17.8 million, according to Autodata, from 16.7 million a year earlier and topping estimates for a 17.3 million rate. It was the fastest pace since July 2005, Autodata said. The biggest surge is coming in SUVs, minivans and pickups, which gained 6.8 percent last month while traditional car sales fell 3.7 percent.

Rising Prices

Average purchase prices continued to edge up in May, with Ford reporting a $2,300 increase. Fiat Chrysler vehicles sold for 3.8 percent more than a year earlier, according to Kelley Blue Book estimates. The average new-vehicle loan in May was 67.9 months, the highest on record, Edmunds.com said.

Nissan said deliveries declined 0.8 percent, narrower than the 2.4 percent drop projected by analysts, while Toyota’s slipped 0.3 percent, beating the estimated 1.8 percent slide. Honda sales rose 1.3 percent, compared with the average expectation of a 4.4 percent decrease.

Ford’s total light-vehicle deliveries were 250,086, and its decline for the month was narrower than the 3.1 percent average estimate.

The company’s top seller, the F-Series pickup, saw sales drop 9.7 percent as the automaker continues to boost production of the new aluminum-bodied F-150. Ford said Tuesday that it will shorten its summer shutdown by a week at F-Series and SUV plants to crank out an extra 40,000 models.

The extra week of output should help offset overtime production being lost now to a shortage of F-150 frames, said a person familiar with the matter, who asked not to be identified discussing the automaker’s manufacturing plans.

“We began the month at about half the inventory we normally carry on F-Series,” limiting sales opportunities, Mark LaNeve, Ford’s U.S. sales chief, told analysts on a call today.

Deliveries of Ford’s newly redesigned Edge SUV rose 34 percent to a record 14,399. Sales climbed almost 40 percent for the new-look Mustang, 31 percent for the Fiesta small car and 50 percent for the Lincoln Navigator large SUV.

GM Increase

GM beat analyst estimates of a 0.1 percent increase, posting sales of 293,097, according to a statement. With sales to commercial and rental fleets down, retail deliveries rose 7 percent, the company said.

Sales of the Silverado pickup rose 11 percent and the GMC Sierra pickup was up 3.6 percent. Deliveries of most crossover SUVs increased, and the Cadillac SRX and extra-long Escalade ESV both surged more than 20 percent.

Fiat Chrysler’s North American unit delivered 202,227 vehicles last month, beating the average estimate for a 2.6 percent gain. Chrysler brand sales jumped 32 percent to 29,802, led by a sixfold surge to 20,007 for the 200 sedan, while Jeep deliveries expanded 13 percent to 79,652.

“Our Jeep brand continues to set records with its best monthly sales ever in May,” Reid Bigland, Fiat Chrysler’s head of U.S. sales, said in a statement. May was the first time Fiat Chrysler topped 200,000 in monthly sales since March 2007.

Fiat Chrysler has now increased sales for 62 months, dating back to the 2009 exit from bankruptcy of the automaker formerly known as Chrysler. Even with the streak, Chief Executive Officer Sergio Marchionne is urging the industry to consolidate, arguing that profitability even in peak years doesn’t generate enough returns to support investment costs.

FCA US said Ram pickup sales climbed 7.6 percent to 39,952. Jeep deliveries were led by the Wrangler and Cherokee.

VW Deals

Volkswagen AG, which has been relying on leasing to outlast a dearth of new products that is slated to end by 2017, said combined sales of its namesake brand and Audi premium brand climbed 9.1 percent in May, compared with estimates for a 0.9 percent decline. Deliveries of Golf models more than tripling from a year earlier.

The $89 a month it takes to lease a Jetta at some U.S. dealerships is about as low as the price of using an iPhone on some mobile-phone plans. It’s also a sign of how Volkswagen is grasping to turn around its fortunes in the U.S.

The bargain deal -- available after a down payment of about $2,500 on the $17,325 Jetta -- runs over a three-year term. Other recent offers ranged from as low as $39 a month in San Jose, California, to $99 in Boston. VW’s reliance on leasing is designed to lock in repeat customers for 2017, when the German automaker can show them an improved product line. VW, with an aging lineup that lacks a mid-size SUV, seeks to more than double U.S. sales to meet a 800,000-vehicle goal by 2018.

Subsidized leases from Volkswagen, sometimes sweetened by the dealer, illuminate the U.S. as a weak spot for the world’s second-biggest automaker. VW’s American sales have dropped for two straight years, even with industrywide growth now in its sixth year. In recent months, leases accounted for as many as 45 percent of the company’s deliveries -- more than Porsche and about double the rate of most mainstream brands.

“This market isn’t particularly in VW’s favor,” Jack Nerad, an analyst at KBB.com, said in an interview. “They sell mostly small, fuel-efficient kind of stuff, and gas prices have not favored that. A lot of their deals are subsidized. That’s the way they put cars on sale.”

The Wolfsburg, Germany-based company needs to get the U.S. market right to reach its goal of overtaking Toyota Motor Corp. as the world’s biggest automaker by 2018. Its U.S. deliveries fell 10 percent to 366,970 vehicles last year and were down 7.5 percent through April, even with a bump that month from the entry-level Jetta, one of the oldest models in VW’s lineup.

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