Record Vehicle Sales Levels In May Despite Obstacles
Pundits expected, with the reporting of one vehicle recall after another from auto manufacturers, that the new vehicle sales picture would look bleak. However, the post-winter demand continued unabated. Strong sales overall of light-duty truck and utility vehicles boosted vehicles sales again during May.
General Motors was a major beneficiary of the trend as the inventories of new utility vehicles such as the Cadillac Escalade, GMC Yukon, and Chevrolet Suburban remained tight because of the strong demand as GM overall reported the best sales since the collapse of the Lehman Brothers in the autumn of 2008.
Ford, Chrysler, and Toyota all benefited from the same trend. For example, Chrysler passenger car sales dropped by 27 percent, but Jeep sales set an all-time monthly record and sales of Chrysler’s Ram brand also increased. Meanwhile, Ford reported brisk sales of the Ford Explorer and Toyota posted brisk sales of its new Highlander, pushing Toyota to an overall sales increase.
GM, Ford, Chrysler, Nissan, Toyota, Honda, Hyundai, Kia, BMW, and Audi all reported increased sales during May.
Despite the ongoing recall controversy, GM reported a 13 percent increase in sales compared with a year ago, marking the company’s best May in seven years and its best total sales since August 2008. A big chunk of the increase came from the strong sales of the new utility vehicles that GM introduced during the winter. GM also now expects to gain market share this year.
Ford posted a three percent increase from a year ago despite predictions that the company’s sales would fall during May.
The one anomaly in the otherwise rosy picture belongs to Volkswagen of America which, despite brisk sales of its diesel-powered vehicles, continued to stumble, reporting a fifteen percent decline in sales. So far this year VW sales have dropped 11.4 percent.
But there are limits. Richard Curtin, Director of the University of Michigan-Reuters Survey of Consumer Sentiment, said consumers are worried about the limited bleak for wage growth. Small wage gains meant that nearly half of all households anticipated declines in inflation-adjusted incomes during the year ahead. Overall, the data are consistent with gains in real consumer expenditures of 2.5 percent during 2014, Curtin said.