U.S. car sales cool off

U.S. car sales cool off
Shortage of models, weak incentives, cause shoppers to delay buying
By TOM KRISHER and DEE-ANN DURBIN Associated Press

DETROIT -- U.S. auto sales cooled off in May as dealers started running short on some popular, fuel-efficient models and buyers were turned off by sharply lower incentives.

Deals aren't likely to come back until the end of this summer. Some experts are advising people to delay their purchases if they can.

"If you don't have to buy, wait until fall. If you lease a car, extend it," said Edmunds.com chief Jeremy Anwyl.

Consumers heard that message in May. U.S. auto sales were expected to be around 1 million cars and trucks, down 8 percent from April and 4 percent from last May.

Toyota Motor Corp. and Honda Motor Co. and Nissan Motor Co., all of which ran short of models due to parts shortages caused by the March 11 earthquake in Japan, had the biggest sales declines, with Toyota down 33 percent, Honda off 23 percent and Nissan off 9 percent compared with May of last year.

General Motors Corp. sales dropped 1.2 percent, as falling pickup truck sales offset strong sales of more fuel-efficient cars and crossovers. It was the same story at Ford Motor Co., which saw sales fall 2.4 percent for the month. Pickup sales dropped more than 10 percent at both companies.

Once again, small, compact and midsize car sales were up and truck sales were down because of high gas prices.

At Ford, where the F-Series pickup is traditionally the top-selling vehicle in the U.S., fuel economy clearly was driving sales. For the first time in decades, the company sold more F-150s with V6 engines (55 percent) than it did with larger V8s.

Despite a raft of bad economic data in the past few days, automakers generally said they were still optimistic for the year, with Ford and GM sticking with annual forecasts of around 13 million in U.S. sales. That's far short of the 2000 peak of 17.3 million, but better than the 10.4 million trough in 2009.

Ford even increased third-quarter production by 8 percent over last year, and its chief economist, Ellen Hughes-Cromwick, said there was good economic news with the bad, including moderating of gas prices, low interest rates and better availability of loans.

"We caution against reading too much into the monthly data," she said.

Don Johnson, GM's vice president of sales, said consumers are taking a wait-and-see approach as gas prices fluctuate around $4 per gallon. Construction remains weak, hurting truck sales.

Even so, Johnson feels consumer confidence over the long term remains strong and sees pent-up demand among drivers who kept their vehicles longer than usual during the recession. He expects sales and incentive spending to rise toward the end of the summer.

The car companies offered their lowest incentives in six years last month, according to Edmunds, spending an average of $2,094 per vehicle on sweeteners such as rebates and low-interest loans. That's flat from April and nearly 20 percent lower than in May of 2010.