May Car Sales Return To Pre-Recession Levels

DETROIT (WWJ) - Good weather and a strong Memorial Day weekend helped car buyers ignore reports of recalls, pushing car and truck sales up more than ten percent in May.

"I'm totally flabbergasted," said George Magliano, senior auto economist at IHS Automotive.  "They've beat my expectations, but I was conservative.  They've beat everybody's.  That's the way it's shaping up."

The SAAR (Seasonally Adjusted Annual Sales Rate) is expected to come in between 16.5 and 17 million, returning the industry to rates that were seen before the recession.

"Auto sales for the month of May seemed almost to defy logic," said Kelley Blue Book analyst Jack Nerad. "In a month that included dismal consumer confidence scores and the announcement that the American economy as a whole had actually contracted in the first quarter, auto sales were very robust. General Motors' sales results epitomized that trend of defying logic. GM announced a near-record number of recalls during May, yet it turned in its best monthly sales since August 2008, the last month before the financial meltdown that triggered the Great Recession."

Double digit sales increases were the norm, including a 13 percent increase at General Motors, which was making recall announcements several times a week during May.

"When you look at the impact of the recall," said GM spokesman Jim Cain.  "It's hard to see the impact on our sales.  Our retail sales are up 10 percent.  There may be an impact, but it's probably small."

Jessica Caldwell, senior analyst at online carbuying site Edmunds.com says there was a lot of recall news in May, and car buyers seemed to tune it out.

"People are still buying," she said. "I think, if anything, people vote most strongly with their wallets. I think that's good news for General Motors."

GM's new pickups had a solid performance in May.  But, Cain says it was also a good month for cars.

"Chevrolet cars really stood out," he said.   "The Cruze had a phenomenal month, up 41 percent.  Camaro was up 30 percent.  Impala was up 23 percent."

The Camaro's competition also had a good month.  Ford Mustang sales were up 11 percent.  Dodge Challenger sales rose 4 percent.

That pales in comparison to the 58 percent rise in Jeep sales.

"Four out of five Jeep vehicles set sales records in May," says Chrysler spokesman Ralph Kisiel.

That pushed Chrysler to a 17 percent sales increase, leading the domestics.

Kisiel says the month ended on a strong note.

"We really saw sales pick up in the last week of the month," he said. "I think the spring selling season is in full swing now."

Ford sales rose 3 percent.  But the company says it was its best retail May in a decade.  The Fusion and Escape set records.

Volkswagen was one of the few brands to see sales drop, 15 percent.  Nissan sales rose 19 percent.  Toyota sales are up 17 percent. Hyundai had its best month ever, with sales up 3.7 percent.

"May is always a very strong month, but this year in particular, a number of factors," said Michelle Krebs, an analyst with AutoTrader.com. "We had that extra weekend, with Memorial Day Weekend folded in there."

But, Krebs says there's are other things at work.

"I think we're seeing pent-up demand from bad weather throughout the first quarter, and an improving economy."

Analysts feel that May is not a one month spike, but the start of a very solid summer, with sales reports well above a 16 million annual rate.

"Sales are real solid," said Ford analyst Erich Merkel.  "I think as we go through the summer, they'll continue to be in that range."

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