DETROIT – U.S. car buyers are tapping the brakes.
May is usually one of the strongest months of the year for the U.S. auto industry, as Americans buy cars ahead of summer road trips. But last month, U.S. auto sales were expected to drop 6 per cent to 1.53 million cars and trucks, according to car shopping site Kelley Blue Book. And KBB says sales are likely to remain flat all summer.
Most major automakers reported lower sales in May compared to the same month a year ago. General Motors’ sales fell 18 per cent, Ford’s were down 6 per cent and Toyota’s sales dropped 10 per cent. Volkswagen’s sales dropped 17 per cent. Nissan’s fell 1 per cent.
Fiat Chrysler bucked the trend, with sales up 1 per cent. Other automakers report sales later Wednesday.
The declines could be a sign that U.S. auto sales are finally reaching a plateau after six straight years of growth — a streak not seen since the 1920s. Sales rose 6 per cent between 2014 and 2015 but are only up around 1 per cent so far this year, according to Ford’s calculations.
Flattening sales could be good for consumers, at least in the short term. Automakers are offering more discounts in order to keep growing their U.S. market share. Car-buying site TrueCar.com estimated that incentive spending rose 7 per cent in May to average of $3,034 per vehicle.
But those discounts can hurt resale values and automakers’ profits, so companies have to be careful as they deal with a dip in demand.
GM and Ford shares both fell nearly 4 per cent in morning trading Wednesday, reflecting investors’ fears that the companies can no longer count on easy U.S. sales increases. GM’s shares dropped to $30.13 while Ford’s shares fell to $13.03.
Results from early in May were enough for LMC Automotive, a forecasting firm, to lower its forecast for the full year. LMC said it now expects total U.S. sales of 17.7 million vehicles this year, down from its previous target of 17.8 million.
But even 17.7 million vehicles would break the record of 17.5 million that was set last year. So even if sales plateau, they remain at very high levels.
“The sky is not falling,” said Michelle Krebs, a senior analyst with Autotrader.com. “Sales remain at very lofty levels.”
General Motors Co.’s sales dropped 18 per cent from last May to 240,450 vehicles. Its Chevrolet and Buick brands saw the biggest declines; sales of the Chevrolet Silverado pickup, its bestseller, were down 13 per cent. GM blamed tight supplies of new products, including the Chevrolet Cruze small car, as well as planned reductions in sales to rental car fleets. GM’s rental car sales were down 49 per cent.
Ford Motor Co. said its F-Series pickup sales rose 9 per cent and its luxury Lincoln brand saw a 7-per cent sales increase. But that couldn’t make up for a 26-per cent decline in car sales. Ford’s SUV sales were flat. Ford’s overall sales dropped 6 per cent to 235,997.
Toyota Motor Corp. said its U.S. sales fell 10 per cent to 219,339. Its car sales dropped 16 per cent while its SUV and truck sales fell 2.5 per cent. Sales of the Prius hybrid plummeted 36 per cent, the victim of low gas prices.
Nissan Motor Co.’s sales fell 1 per cent to 133,496. Sales of Nissan and Infiniti trucks and SUVs rose 6 per cent, but car sales fell.
Fiat Chrysler’s sales rose 1 per cent to just over 204,000 vehicles, its best May in 11 years. The all-SUV Jeep brand led the way with sales up 14 per cent. But Chrysler brand sales fell 19 per cent as car sales faltered, and the Dodge brand dropped 5 per cent. Ram pickup sales fell 3 per cent.
Volkswagen AG’s sales dropped 17 per cent to 28,779 as the fallout continues from the German automaker’s diesel emissions.