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GM, Ford report lower U.S. auto sales in May

General Motors Co (GM-N) and Ford Motor Co (F-N) reported slightly lower U.S. vehicle sales in May, a month when broader economic weakness and higher vehicle prices prompted consumers to delay major car purchases.

GM sales chief Don Johnson projected the annualized vehicle sales rate industry-wide for May would be between 12 million and 12.1 million including heavy-duty trucks. Johnson added that the industry would probably be under 13 million for "the next couple of months."

"There's been a lot of recent key data that's come in a little weaker than we expected," Johnson said on Wednesday during a call with analysts and reporters. "We continue to believe that the recovery remains on track, but clearly we also see some challenges that we need to overcome."

Incentives, which lower the price of a vehicle, fell sharply in May. Data firm estimated that the average transaction price for light vehicles in the United States was $29,817 US in May, the highest ever recorded in data going back to 2002.

"Early in the month, consumers sat on their hands," Johnson said. GM and Ford were the first major automakers to report monthly sales figures, one of the first snapshots of consumer demand in May.

GM sold 221,192 vehicles in the month, down 0.5 percent from 222,305 in May 2010 excluding four brands the company no longer sells.

The figure fell short of Wall Street and industry forecasts, which had predicted total sales ranging from about 225,000 estimated by data firm to 242,000 forecast by Jefferies.

Ford sold 192,102 cars and trucks in May, down 0.1 percent from 192,253 a year earlier. This fell short of the 195,000 vehicle sales projected by Barclays Capital, but was above the 188,280 sales figures estimate from

Chrysler Group LLC said its May U.S. vehicle sales rose 10 percent from a year ago to 115,363, driven by a 55 percent jump in sales of Jeep models. Volkswagen of America sales rose 27.9 percent to 30,100 vehicles. But Nissan Motor Co, based in Japan where the March 11 earthquake disrupted production across many industries, said U.S. sales fell 9.1 percent in the month to 76,148.
"As inventories normalize in the next few months, we're all going to be forced to do what we do best and that's compete," said Al Castignetti, Nissan's North American sales chief. Asked if that meant that industry incentives would have to rise, he replied, "Yes, absolutely."

Economists polled by Reuters projected the industry-wide annualized sales rate would be around 12.6 million in May, 8.6 percent higher than in May 2010.

If these forecasts prove true, this will be the first time the annualized sales rate has dropped below 13 million since February. The May sales numbers come as analysts are raising concerns about a slowdown in the broader economy.

"The slowdown in the economy and high oil and gas prices -- that obviously hurts where they make most of their profits in the bigger trucks," said Mirko Mikelic, portfolio manager at Fifth Third Asset Management. "We're hitting a soft patch in the economy and it will hit a lot of the auto companies."

U.S. private-sector payroll growth slowed sharply in May, falling to the lowest level in eight months and prompting some economists to lower forecasts for job growth in Friday's U.S. government report.

Japanese auto sales fell by a third in May to the lowest total for the month since 1968, as carmakers struggled to restart production after the earthquake and tsunami that roiled the country in March. But South Korean carmakers continued to gain traction, with Hyundai Motor and affiliate Kia Motors posting double-digit sales growth, driven by solid demand for new models.

In France and Spain, car sales tumbled as government incentives to replace old models came to an end. French sales fell 8.3 percent on an adjusted basis, while sales in Spain slid 23.3 percent, the 11th straight monthly drop. CTV Two CTV News CTV News Channel BNN - Business News Network CP24