Domestic Car Sales Drop 2.6% in May; Imports Rise 6.5%

Times Staff Writer

Despite widespread sales campaigns and financing incentives, domestic new car sales dipped 2.6% in May below sales a year ago. The sale of imports, however, increased by 6.5%.

As a result, overall auto sales were relatively flat. According to figures released Wednesday by the auto companies, Americans bought 1,071,268 new cars last month, down a slight 0.3% from May last year, when 1,075,085 automobiles were sold.

Domestic sales had been fairly strong for the first 20 days of May but slipped 10.9% during the final 10-day reporting period.

Of the major U.S. auto makers, Chrysler was the only one to report a gain for the May 20-31 period, up 9.3%. General Motors said its sales fell 12.7%, and Ford’s sales were off 14.4% in the period.


Auto analysts noted that while domestic sales were weaker than they anticipated, the year-to-year comparison made the decline seem more severe since May was a strong month for the auto makers in 1985.

Inventories Reduced

“Rebates (and other incentives) are accomplishing what they set out to do by reducing (domestic) inventories,” said John Hammond, an analyst with Data Resources. He added, however, that he expects the auto makers to expand their current incentive programs if the sales pace continues to lag in June.

The seven U.S. auto manufacturers sold 786,268 new cars last month, down from 807,590 in 1985. Of the seven, only Chrysler and American Honda reported sales increases, up 10.1% and 6.9%, respectively. GM and Ford both reported declines of 3.8%.


Although declines were reported by Toyota and Nissan, the top two foreign nameplates, imports claimed 26.6% of the market in May. An estimated 285,000 imports were sold in last month, compared to 267,495 in 1985.

Industry observers noted that the import sales increase was due in part to the strong performance by Hyundai, which began importing cars in the United States in February. The South Korean auto maker reported selling 13,963 Excels in May.

Of the major importers, Toyota said its sales were off 10.6% in May, Nissan reported a 7.6% decline and Honda’s sales rose 8.9%.

Despite a series of price increases by Japanese manufacturers, analysts attributed any drop in sales to depleted inventories and strong April sales rather than sticker shock. They warned, however, that as prices continue to rise, sales could begin to suffer.


“We should be able to tell by next month if sales are indeed weakening in the face of price increases,” said Hammond.

Higher Annual Rate

On a seasonally adjusted basis, domestic new cars sold at an annual rate of 8.4 million in May, well above the current trend this year of 7.7 million. Imports sold at a strong annual rate of 3.1 million.

The annual rate is a reflection of the number of cars that would be sold if a period’s sales pace were to continue for a full year.


Both domestic and import manufacturers reported that light truck sales continued to rise in May. Sales of U.S.-built light trucks increased to 345,529, up 5.4% from 1985’s level of 327,856, while import truck sales rose to 76,764, up 7.5% from 70,903 in 1985.

Auto Sales % May 1986 1985 change GM 461,559 479,554 -3.8 Ford 187,133 194,547 -3.8 Chrysler 107,867 97,981 +10.1 AMC 5,117 10,063 -49.2 VW U.S. 7,517 8,088 -7.1 Honda U.S. 16,132 15,096 +6.9 Nissan U.S. 943 2,261 -58.3 DOMESTIC 786,268 807,590 -2.6 Toyota 62,435 69,846 -10.6 Nissan 47,343 51,251 -7.6 Honda 38,829 35,662 +8.9 Mazda 16,853 15,792 +6.7 Subaru 14,505 14,441 +0.4 Volvo 10,146 10,025 +1.2 VW Imports 16,398 16,065 +2.3 Hyundai 13,963 -- -- Others* 64,528 54,413 +18.6 IMPORTS* 285,000 267,495 +6.5 TOTAL U.S. 1,071,268 1,075,085 -0.3