U.S. auto sales rise sharply in May; analysts cite pent-up demand
Automakers posted strong sales gains in the U.S. last month as pent-up demand and loosening credit brought customers into the market after spending the recession on the sidelines, pointing to a continuing recovery for the auto industry in 2012.
Volkswagen reported 38,657 units sold in May, a 28.4% increase over the same period last year.
Chrysler posted sales of 150,041 units, a 30% increase from May last year, driven by gains in the Fiat brand of 128% year over year.
Sales of Ford vehicles grew 13% over last year, with 216,267 vehicles sold.
General Motors reported sales of 245,256, an 11% year-over-year increase.
These numbers come amid reports indicating a slowdown in the recovery of the U.S. jobs market.
“We do believe that, despite some fluctuations in the short-term numbers, the continuing underlying trends are very positive,” said Jonathan Browning, chief executive of Volkswagen of America.
Industry professionals and analysts indicated that the strong sales were due to the return to the marketplace of consumers who sat out during the recession.
“So far the industry has recovered due to pent-up demand,” said Jenny Lin, senior U.S. economist for Ford on a conference call.
Analysts partially credited the availability of credit with the pace of sales growth. People who couldn’t get loans as lending standards tightened during the recession were shut out of the market.
The average FICO credit score is at its lowest level since the recession period, said Christopher Li, an analyst at J.D. Power & Associates.
“If we saw a really high score, it would tell us that most people getting loans were people with very good credit. When FICO scores are low, that tells us we have a real mix of customers in the market.”
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