May Auto Sales a Strange Mix that Shows how Demand is Fragile
The knee jerk reaction to May auto saleswould be dismissing them as irrelevant since it was a strange mix of factors.
Whether you factor in the Japan auto production problems or the spike in gas prices or the possibility that the economy is slowing down, there are plenty of reasons to ask yourself if May is an accurate gauge of the auto industry, the consumer and the economy.
So what does May tell us?
Chrysler is coming back: With may sales jumping 10.1%, Chrysler posted its best monthly sales since 2008. See what happens when you roll out new models! You can come back from the dead, as Chrysler has done.
Hyundai keeps surging: Sales jumped 20.7% for the month and the company had two of the top ten selling model for the month (#7 Hyundai Sonata and #10 Hyundai Elantra). These guys are running close to capacity, and still find themselves dealing with a tight supply.
6 cylinder is the engine of choice in trucks: Ford sold more 6 cylinder F-150's then 8 cylinder versions. Proof that pick up buyers want better mileage.
Don't read too much into the drop in Toyota and Honda sales. Yes, they find themselves in an unusual spot, trailing the Big 3 in monthly sales for the first time since 2006. But keep in mind, their supply of cars and truck was severely restricted. Sales will bounce back when production returns to normal later this year.
Pricing is what will slow down sales: May sales showed that consumers will hold off buying a new car if you raise sticker prices and drastically cut incentives. Transaction prices are at an all time high, and it may take time for some consumers to adjust.
Click on Ticker to Track Corporate News:
- General Motors
- Ford Motor
- Toyota Motor
- Honda Motor