Auto Sales Dive 11%, but Worst May Be Over : Transportation: Some manufacturers believe figures hit bottom in May and summer should bring relief as economic indicators strengthen.
Sales of new cars and trucks tumbled 11.3% in May, but a quickening in the lethargic pace that marked the first four months of the year prompted auto makers and analysts to voice cautious optimism Tuesday that sales may soon climb out of their deep slump.
“Based on a strengthening of various economic indicators, we believe that the present economic cycle has bottomed out and we expect to see a near-term improvement in new car and truck sales as we head toward the 1992 model year,” said J. B. Fitzpatrick, General Motors Corp.’s vice president for communications.
The No. 2 U.S. auto maker issued a more sober sales forecast. “The economic recovery on Wall Street is not yet evident on Main Street,” said Robert Rewey, Ford’s sales vice president. “Underlying economic weakness will moderate any near-term sales resurgence.”
The major auto makers sold 1,161,798 vehicles in May, compared to 1,309,303 in May, 1990. On an annualized basis, vehicles sold at a rate of 12.1 million in May, up from April’s sluggish 11.2 million, though still far short of last May’s annual rate of 13.8 million. Annual rates use seasonal patterns to predict the auto industry’s sales rate for a full year.
In 1990, a weak year for the auto industry, Americans bought 13.8 million cars and trucks. Since January, annual vehicle sales rates have been well below year-ago levels.
“The situation isn’t getting worse, which in and of itself is a good sign,” said Clifford Swenson, an economist with industry research firm Susan Jacobs Automotive in Little Falls, N.J. “It’s still nothing to jump up and and down about, but the overall assessment has to be toward the positive.”
A separate report released by the National Assn. of Purchasing Managers on Monday appeared to reinforce the notion that auto sales might start to pick up in the near future. Purchasing managers in the metropolitan Detroit area said that business conditions for the auto industry posted a sharp rise in May.
“The most impressive aspect of May’s survey was the strength noted in the automotive sector response,” said David Littman, senior economist at Manufacturers National Bank of Detroit.
“Both auto and non-auto respondents cited overall improvement in business conditions between April and May, but the auto and auto-related group recorded the highest activity level since June, 1990,” Littman said.
The brighter employment forecast for the third quarter will also help bolster auto sales, Swenson said.
“As the job market starts to look a little better, people start to feel a little bit more confident and a little more able to go out and start spending money,” Swenson said.
Optimistic predictions notwithstanding, auto dealers interviewed Tuesday said consumers are still slower to buy cars.
“They’re tough buyers out there now,” said George Miller, sales manager at Scott Robinson Honda in Torrance. “Everybody’s spending a lot of time doing a lot of shopping. They’re not giving their money away.”
Miguel Ocasio, sales manager at Los Feliz Ford in Glendale, said sales are gradually improving.
“Our sales have been picking up slowly, slowly, slowly,” Ocasio said. “But now we are on the verge of the buying season, and I think we’re going to see a better June, July and August.”
GM, Ford and Chrysler Corp. posted a combined 12.6% drop in sales from last May, while Japanese companies’ sales slipped 5.9%. Chrysler fared the worst of the Big Three, with car and truck sales down 15.5% for the month. GM said sales tumbled 11.9%, and Ford posted a 12.1% decline. Toyota sales fell 7%, Honda was down 4.8%, and Nissan sales were off 7%.
Auto Sales Seasonally adjusted annual rates for U.S. cars and trucks. Domestic figures include vehiclesbuilt in the United States by Japanese auto makers. The figures use seasonal patterns to predict the auto industry’s sales rate for a full year. Domestic 1990 Mar: 13.9 Apr: 13.8 May: 13.7 Jun: 14.3 Jul: 14.2 Aug: 13.7 Sep: 14.4 Oct: 13.5 Nov: 12.7 Dec: 12.7 1991 Jan: 11.1 Feb: 11.8 Mar: 12.4 Apr: 11.2 May: 12.4 Source: U.S. Department of Commerce Highlights Subaru, Isuzu and Suzuki were the only auto makers to post sales increases in May. Subaru sales jumped 7.9%, Isuzu was up 8.3% and Suzuki sales climbed 10% During the last 10 days of May, North-American vehicle sales skidded 14.5%. The steep declinewas partly a reflection of particularly strong sales during the same period in 1990. Despite the company’s complaint last week that unfairly priced Japanese-built minivans are hurting its sales, Chysler Corp. reported a 4% increase in minivan sales over May, 1990.
