(GM) Auto Sales Show Strong Growth in May

U.S. saw a strong 18% growth in sales to seasonally adjusted annual rate (SAAR) of 13.8 million units in May from 11.7 million units in the same month of 2011 driven by lower gas prices, better access to credit, improved trade-in values for new cars, and, as usual, strong pent up demand.

And guess what! The improvement in sales was attained without heavy sales incentives. According to the automotive information website Edmunds.com, sales incentives during the month was $2,100 per vehicle, which was almost flat compared with the year-ago level.

All the major automakers posted strong sales gains. Let us take a look at each of them one by one.

U.S. Automakers

General Motors Company (GM) reported an 11% rise in sales to 245,256 units of cars and trucks, which is the company’s highest monthly total since the Cash for Clunkers program in August 2009. Sales of small cars went up 16% due to the strong demand for the Sonic subcompact while pickup sales improved due to increased construction activity during the month.

Ford Motor Co. (F) saw a 13% rise in sales to 216,267 vehicles driven by improved demand for its F-Series pickups (29%) and SUVs following the increased construction activity. However, car sales were modest. Sales of the Focus small car grew 11% during the month.

Chrysler Group LLC – controlled by Italy’s Fiat SpA (FIATY) – reported a 30% jump in sales to 150,000 cars and trucks. Chrysler brand sales surged 80%, while Jeep sales swelled 24% during the month.

Japanese Automakers

Toyota Motor Corp. (TM) reported a sharp 87.3% rise in sales to 202,973 vehicles. The automaker revealed that the remarkable increase in sales can be attributable to the weaker comparable month last year on the back of disruptions in supply of vehicles following the earthquake and tsunami in Japan on March 11, 2011.

Honda Motor Co. (HMC) sales shot up 47.6% to 133,997 vehicles driven by strong sales of Accord (up 74.7%) and Civic (up 82.6%) sedans. Sales of Honda cars and trucks spiked 46% to 119,411 units, while Acura sales surged 62.1% to 14,586 units.

Nissan Motors Co. (NSANY) recorded a 20.5% rise in sales to 91,794 vehicles driven by strong sales of trucks and SUVs. Some of the popular trucks sold by Nissan during the month include Frontier (up 17.2%), Titan (up 86.7%), Pathfinder (up 32.6%) and Armada (up 26%).

Other Automakers

Daimler AG’s (DDAIF) Mercedes-Benz sales scaled up 19% to 22,515 units. The higher sales were led by C-Class sedan (up 35%) and M-Class sport-utility vehicle (up 66%).

Volkswagen AG (VLKAY) sales rose 28% to 38,657 units. The higher sales were attributable to the company’s high-mileage and clean diesel models. Jetta sedan was the top-selling vehicle during the month.

Hyundai Motor Co. (HYMLF) sales grew 13% to 67,019 vehicles. Sales of the Sonata and Elantra, the company’s most popular vehicles, fell 8.7% and 5.6%, respectively. Meanwhile, sales of Genesis sales went up 38%, Equus sales rose 59% and Accent more than quadrupled to 6,166 units during the month.

Outlook

Strong pent-up demand and higher consumer confidence led by improving macroeconomic conditions in the U.S. will continue to revive the industry from recessionary lows. Average vehicle age of vehicles on the U.S. road is 10.8 years. The replacement rate is expected to remain solid until 2013.

Good news is that a revival of the automotive industry will lead to a recovery in other industries as well since the former generates demand for many products that are used in manufacturing the automotive components.

Automakers have started increasing the headcount at their plants in order to support healthy demand for vehicles. According to Bureau of Labor Statistics, employment at auto manufacturers and their suppliers rose 6% to 644,000 workers in the first quarter of 2012 from the prior-year quarter.
DAIMLER AG (DDAIF): Free Stock Analysis Report

FORD MOTOR CO (F): Free Stock Analysis Report

FIAT SPA (FIATY): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

HONDA MOTOR (HMC): Free Stock Analysis Report

(HYMLF): ETF Research Reports

NISSAN ADR (NSANY): Free Stock Analysis Report

TOYOTA MOTOR CP (TM): Free Stock Analysis Report

(VLKAY): ETF Research Reports

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