U.S. light-vehicle sales surged 11% year over year to 1.61 million in May 2014. Sales on a seasonally adjusted annualized rate (SAAR) basis increased to 16.8 million in May 2014 from the year-ago level of 15.5 million units. The May SAAR is the highest since Jul 2006.
All major automakers reported strong sales figures, led by General Motors Company (GM - Analyst Report). Toyota Motor Corp. (TM - Analyst Report), Nissan Motor Co. Ltd. (NSANY) and Chrysler also reported double-digit sales growth. Nissan led in terms of the year-over-year sales growth rate.
Consumers remained unfazed by the unending stream of recalls by General Motors, leading to the company’s best May sales in seven years. Meanwhile, Ford Motor Co. (F - Analyst Report) reported its best May retail sales in 10 years, while Toyota had its best monthly sales in 6 years. Chrysler Group also reported its highest May sales since 2007.
Let's look at the U.S. sales figures reported by the individual automakers.
General Motors recorded 284,694 vehicle sales in May, up 13% year over year. Retail sales also increased 10%, while fleet sales improved 21%.
Ford reported a 3% increase in total sales from the year-ago period to 254,084 vehicles in May 2014. Retail sales improved 6% year over year to 174,889 units.
Chrysler Group – controlled by Italy’s Fiat S.p.A – recorded a 17% year-over-year rise in sales, pulling the figure up to 194,421 vehicles. Chrysler witnessed a year-over-year increase in monthly sales for an impressive 50 consecutive months. Moreover, this is the best May sales for the group since 2007.
Toyota’s sales increased 12.6% year over year on daily selling rate (DSR) basis and 17% on volume basis to 243,236 units in May 2014. Sales in the Toyota division improved 12.2% based on volume and 16.5% on DSR basis to 216,315 units. Lexus sales rose 16.6% on DSR basis and 21.1% on volume basis to 26,921 units.
Honda Motor Co., Ltd. (HMC - Analyst Report) recorded a 9% year-over-year increase in sales on volume basis to 152,603 vehicles in May 2014. Sales on DSR basis increased 5%. Sales in the Honda Division increased 9.8% on volume basis and 5.7% on DSR basis to 137,928 units. Sales of the Acura Division increased 2.2% on volume basis but fell 1.6% on DSR basis to 14,675 vehicles.
Nissan Motor posted an 18.8% year-over-year increase in sales to 135,934 vehicles in May. Sales in the Nissan division also climbed 17.8% to 125,558 units. Additionally, sales of the Infiniti Division hiked 31.4% to 10,376 units in the month.
With the SAAR staying above the 16 million mark in each of the last three months, the improvement in the U.S. auto sales is expected to continue in the months ahead. The current growth in auto sales is buoyed by low interest rates, rising employment rates, growing consumer confidence and recovery of the housing market. Moreover, with the improvement in the general economic situation, banks are offering more car loans with lower interest rates and longer repayment periods. Further, the high average age of cars on the U.S. roads is resulting in high replacement demand for cars as well as car parts.
Moreover, automakers continue to offer ample incentives to attract customers. Five weekends in May and an early Memorial Day acted as the icing on the cake.
In the long term, sales are expected to rise on the back of strong pent-up demand, improving macroeconomic conditions and easier car financing. As the automobile sector is a key industry, improving auto sales will help in reviving the overall U.S. economy.