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Leading Automakers' U.S. Sales in May Present a Mixed Bag

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Auto sales continue to witness volatility. With changing consumers’ preference for relatively expensive pickup trucks, SUVs and crossovers over the less profitable (for the car makers) traditional sedans, the auto sector is now passing through an unprecedented transition. The pulls and push factors of this transition have resulted in volatile auto sales so far this year. The sales decline in February was followed by an increase in March. Again, sales were down in April but rose in May.
 
According to Reuters, vehicles sales in the United States rose an estimated 2% in May 2018. During the month, low unemployment, a vibrant housing sector and robust consumer confidence helped lower the impact of rising interest rates and fuel prices. Robust Memorial Day weekend sales during the month also boosted retail auto deliveries. According to Autodata, U.S. auto sales in May hit an annualized pace of 16.9 million. This was down from 17.2 million recorded in April. Moreover, there was one more selling day in May 2018 than in May 2017.

May Sales of Automakers

May US sales results were mixed for the automakers. In the month, Ford Motor Company’s (F - Free Report) sales increased 0.7% to 242,824 units. Again, Fiat Chrysler Automobiles N.V.’s U.S. sales climbed 11% to 214,294 units on the strength of retail deliveries to individual customers. Among the Japanese automakers, while sales of Honda Motor Co., Ltd. (HMC - Free Report) rose 3.1% that of Toyota Motor Corporation (TM - Free Report) and Nissan Motor Co., Ltd. (NSANY - Free Report) declined 1.3% and 4.1% respectively.

The rise in May auto sales for most of the companies is a good development for the auto sector, which is otherwise experiencing a bumpy ride. In 2017, U.S. auto sales declined 2% after hitting a record high of 17.55 million in 2016. Sales are likely to decline again in 2018, mainly due to higher interest rates, rising fuel prices and a flurry of used vehicles coming off lease.

Currently, while Toyota carries a Zacks Rank #2 (Buy), both Ford and Fiat Chrysler have a Zacks Rank #3 (Hold). Nissan and Honda carry a Zacks Rank #4 (Sell) and a Zacks Rank #5 (Strong Sell), respectively.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Currently, Fiat Chrysler, Ford, Toyota, Honda and Nissan have an expected long-term growth rate of 23.7%, 8.5%, 5.7%, 4.1% and 3.3%, respectively.

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