Signs of life: American auto sales are stronger than expected

By all rights, May could have been a disastrous month for Chrysler and General Motors sales as the companies publicly struggle through restructuring and bankruptcy proceedings, but that was not the case. May sales numbers were surprisingly strong for the American automakers, giving new hope for the future. Even still, the industry still faces clear challenges in the troubled economy.

An increase in consumer confidence, plus offers of incentives and rebates, helped Chrysler, Ford, and GM achieve their highest monthly sales so far in 2009. Ford outsold Toyota for the second month in a row and GM sales were relatively, as well. The two top-selling vehicles in America were the Ford F-150 and the Chevrolet Silverado. The Toyota Camry came in at a close third.

Chrysler’s bankruptcy didn’t have much negative effect on their sales numbers either with Chrysler vehicles seeing an increase of 32 percent, 23 percent for Dodge, and 21 percent for Jeep.

Record sales of the Fusion, Ford Flex, and the company’s hybrid vehicles helped Ford increase their numbers by 20 percent in May.

Even with GM’s pre-bankruptcy struggles, it still achieved an 11 percent increase.

Toyota also had a strong performance, gaining 20 percent.

However, Honda sales were down almost three percent from April to May.

Compared to last year, sales of both Toyota and Honda vehicles were down 39 percent, but as Honda noted in a press release, May 2008 was its best sales month ever. This was mostly due to last year’s high gas prices and consumers buying small fuel-efficient cars at a rapid pace. Both Honda and Toyota’s lineup were well positioned last year to respond to the high fuel costs, thus they saw a surge in sales. GM, Ford, and Chrysler didn’t have the small cars to compete and their numbers don’t reflect such a large decrease from last year in comparison.

The trouble in the auto industry is not just saved for the American automakers. Across the board, all manufacturers are seeing a down year with dismal sales, but the latest figures do show signs of hope.

Surveys conducted by CNW Research in January and repeated in May show a significant change in the attitude among new car intenders who are considering a domestic-brand vehicle. Initially, about half of the interviewed consumers said they would not buy from Ford or GM if they were in bankruptcy with a federal bailout, with a higher 59 percent stating they wouldn’t purchase from Chrysler. (Ford never requested federal assistance.) Those who would not buy without a bailout saw percentages climb to 86 to 91, depending on brand.

In contrast, the May CNW survey finds consumers were more willing to purchase from companies in bankruptcy with a bailout. (Percentages of those who would not buy: Chrysler 43, Ford 20, and GM 37.) Despite the prognostications, consumers became more comfortable with the thought of buying from a company undergoing bankruptcy proceedings. While there are myriad factors at play, including incentives and fire sales, at the core, it seems to be consumer confidence in the company and that it would continue to be there was a key factor in the recent sales uptick.

A number of sales offers and incentive programs are continuing for the month of June to help lure customers into dealerships. (See our Best new car deals for details). We’ll see if next month continues this upward trend and brings more hope to the ailing auto industry.

—Liza Barth