Auto sales strong but miss expectations

Roar from the big three

The auto industry’s recovery maintained a steady pace in May with GM, Chrysler and Ford posting double-digit sales growth. Results, however, trailed estimates as incentive offers failed to draw enough buyers amid slumping job growth. Chrysler posted a 30% increase in May new-car sales in the U.S. market but fell short of the 42% growth analysts had expected.

Chrysler reported May sales of 150,041 vehicles, up from 115,363 in the same month last year. The company's Chrysler, Jeep, Dodge, Ram Truck and Fiat brands all had sales jumps for the month, with Fiat setting a sales record for the fourth-consecutive month. Chrysler announced plans to roll out its key new car introduction, the Fiat-based Dodge Dart later this month as it aims to get the company back into the small-car game.

GM said auto sales rose 11% to 245,256 vehicles in May on double-digit sales gains at the Chevrolet, GMC and Buick brands, which helped offset weakness at luxury line Cadillac. Ford's U.S. new-vehicle sales rose 13% from a year earlier on strong truck and Ford-brand sales. But results missed analysts’ expectations for a 14% jump.

Across the sector, U.S. new auto sales for May are expected to climb 31% from a year earlier and jump 18% from the prior month. One factor fuelling the growth in auto sales has been Americans' increasing need to replace their aging cars and trucks, which are now a record 10.8 years old on average. Higher fuel prices in the first quarter also prompted consumers to swap older, less fuel-efficient models to lock in fuel savings.

General Motors (GM: NYSE: US$21.98), Net Change: -0.22, % Change: -0.99%, Volume: 29,038,333

Ford Motor (F: NYSE: US$10.11), Net Change: -0.45, % Change: -4.26%, Volume: 64,455,195

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

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