U.S. auto sales rose more than expected in May as construction workers and oil drillers bought more pickup trucks to meet growing demand for their services, a trend that major automakers expect to persist throughout the year.
Car and truck sales rose 8 percent during the month, according to Autodata Corp. The annual sales rate was 15.3 million vehicles, beating the 15.1 million rate expected by analysts polled by Thomson Reuters through last week.
Rising U.S. housing prices and relatively stable gas prices bolstered auto sales in May, executives said on Monday. Consumer confidence in May rose to its highest level in more than five years, according to data released last week.
“Equity value, home prices, security of jobs, rising income – all of those are supportive of consumer confidence,” General Motors Co. Chief Economist Mustafa Mohatarem said during a conference call with reporters and analysts on Monday.
“But they also support vehicle sales, so that’s why we remain very confident in our outlook going forward for the auto industry,” he said.
The three major U.S. automakers dominated pickup truck sales, which generally are sold at a higher profit margin than other vehicles. In May, trucks continued to outpace the overall industry, accounting for 11.7 percent of sales, Ford Motor Co. executives said.
Sales of the Ford F-Series pickup truck, the best-selling vehicle in North America since the 1970s, soared 31 percent in May. GM’s top-selling vehicle, the Chevrolet Silverado pickup truck, showed a 25-percent gain. Chrysler’s top-selling Ram pickup truck rose 22 percent.
Growing strength in the U.S. housing and energy sectors has helped drive truck sales over the last several months. Ford and GM executives said pickup truck sales are strong in Texas and North Dakota, two of the top oil-producing states.
“There has been a phenomenon, particularly in Houston, where over the last 18 months or so that market has been showing very, very strong performance for us,” said Ken Czubay, Ford’s head of U.S. marketing, sales and service.
GM shares rose 1.6 percent to $34.42 on the New York Stock Exchange, while Ford share closed up 1.3 percent to $15.89.
GM LOSES GROUND ON FLEET SALES
Crossovers, such as GM’s Chevrolet Equinox, were another bright spot during the month. Sales for the Nissan Motor Co. Rogue, a crossover SUV and Nissan’s second-biggest seller in the U.S. market, showed a 45-percent gain.
Auto sales are an early snapshot of U.S. consumer spending. May marked the sixth month in the last seven that the sales rate topped 15 million, after dropping to 14.9 million in April.
GM’s U.S. market share fell to 17.5 percent from 18.4 percent a year ago, according to Autodata. The No. 1 U.S. automaker’s sales rose 3 percent in May, missing expectations.
GM said its share fell due in part to a 10 percent fall in sales to fleet customers, which include government, business and rental agency buyers. GM’s sales to consumers, which tend to be more lucrative than fleet sales, rose 9 percent in May.
But GM’s U.S. rivals surpassed analyst estimates. Ford, the second-largest U.S. automaker, recorded a 14 percent sales gain. Its U.S. market share rise to 17 percent from 16.2 percent.
Chrysler, No. 4 in the U.S. market, reported an 11-percent rise in sales. Toyota Motor Corp, No. 3 in the U.S. market, had a 2.5 percent sales increase, matching expectations.
Honda Motor Co., No. 5 in the U.S. market, showed a 4.5 percent sales gain, narrowly missing expectations.
During the recession, many Americans put off buying new vehicles, but their aging cars and trucks are now pushing past the point of repair.
This “pent-up” demand has been propelling U.S. auto sales for more than two years. Executives said this source of sales has become increasingly difficult to tap, but the stronger U.S. economy is helping maintain the industry’s momentum.
“It’s difficult because it’s so competitive every day but having said that, housing has kind of led the way with truck sales,” GM’s head of U.S. sales operations Kurt McNeil said.