May Sales Bring Back Big Three

By Dale Buss June 1, 2011

2011 May Big Six Auto Sales.jpg

May was the most unusual month in the U.S. auto industry since August 2008’s “cash-for-clunkers” anomaly. The typical springtime updraft had no wind. Executives said a year-to-year decline in sales was only a temporary respite in the industry’s building recovery, and they made a good case. Pickup-truck sales declined. Ford sold all the small cars it could make for the California market. The Chevy Malibu was the country’s best-selling car. And for the first time since February 2006, Chrysler outsold Toyota. Even high-flying Hyundai threatened the pre-eminent Japanese brands. The domestic Big Three actually ranked 1-2-3 in U.S. sales in May for the first time in many years.

Overall, auto makers sold about 1,061,000 units in the United States last month, a total that was down nearly 4 percent from May 2010 and a notable falloff of more than 8 percent from April of this year. The seasonally adjusted annual sales rate (SAAR) dipped to about 11.8 million units from the relatively heady level of 13.2 million in April. “It was significant because May traditionally is a strong sales month, and this was definitely against trend,” said Jessica Caldwell, director of industry analysis for Edmunds.com. “The last time May sales came in below April was 2005, and that was only by 0.3 percent. What we saw this year was completely different.”

The reasons for the unusual May were pretty clear. It was when Toyota, Honda, Nissan and other Japanese automakers confronted for the first time the full impact of the supply disruptions wrought by the March 11 earthquake and tsunami. The automakers and news media warned of huge problems building Japanese vehicles and getting them into the American market, and U.S. consumers believed them. Toyota’s sales fell off by 33 percent, Honda’s by 23 percent, and Nissan’s by 9 percent in May compared with a year earlier.

Pent-up Demand
“We saw a decline in sales, but we haven’t seen any decline by consumers in the desire to buy cars,” said Kirk Schneider, head of Nate Wade Subaru, a dealership in Salt Lake City. “The sales track wasn’t as good as in April. It’s pretty hard to sell to zero inventory.” Caldwell noted that “a lot of consumers reacted pretty strongly. They expected to find not a lot of Japanese brand cars for sale and that they’d be paying a premium for them in pricing. People were making hard decisions about what they wanted to drive.”

The beneficiaries of all the doubt and confusion that surrounded the Japanese brands, of course, were General Motors, Ford, Chrysler, Hyundai, Kia and Volkswagen, each of whom had relatively generous supplies available of the small cars that consumers now are seeking out in droves because of higher gasoline prices. GM and Ford made and sold as many small cars as they could but struggled to only flat overall results because of expected falloffs in fleet sales and a drag by higher pump prices on important pickup-truck sales. Specializing in small vehicles, the Korean and German mainstream brands reported blistering sales results for May in the absence of enough Japanese models in the market, though Hyundai didn’t surpass Toyota and Honda as some prognosticators had thought.

Curiously even for such a strange month, May seemed to be bifurcated internally, as well as externally from other months this year. The first part of the month was the toughest, as Japanese supply restrictions really bit hard, and U.S. gasoline prices peaked. But beginning mid-month and continuing to some degree through the Memorial Day weekend, the market thawed a little bit as gasoline prices began a 20-cent-a-gallon plunge from their high. Japanese brands launched aggressive new incentive programs seeking to recover customers they’d forsaken, as company executives also voice optimism that full production would return earlier than they had said previously.

May 2011 Midsize Car Sales.jpgMay 2011 Compact SUV Sales.jpg

Tale of Two Mays
“We really had two different months in May,” said Bob Carter, group vice president and general manager of the Toyota division in the United States. “Early on, because of inventory concerns, we dialed back on our marketing programs and the sales pace slowed. By mid-May, however, the production outlook was rapidly improving and we were able to reinstate many of those programs.” Don Johnson, GM’s U.S. vice president of sales, said that, for the whole month, figuring the sales rate without the Japanese brands, “it was down only very slightly from what we saw in April. It wasn’t dramatically lower.”

Even pickup-truck sales benefited from the blip to somewhat-friendlier market conditions in late May. “The segment actually rebounded nicely during the second half of the month, with gasoline prices going back the other way,” Fred Diaz, CEO of the Ram brand, told AutoObserver.com. “We have real-time data that tells us regularly how segments are doing. The segment was struggling pretty badly but then started to show some lift and rebound.” Sure enough, Chrysler – alone among the domestic Big Three – reported a rise in pickup-truck sales in May.

In general, however, growing demand for small cars and crossovers was the story in May; it was just a matter of if and where consumers could find them. Subcompact and small cars comprised about one-quarter of total industry sales in May, said George Pipas, Ford’s head of U.S. industry analysis, up about three percentage points from the same period a year ago. But that proportion has barely nudged from March. “Lean inventories probably established an artificial ceiling on the segment for these months and maybe established an artificial ceiling on the industry sales rate.”

Economic Haze
The question now is whether the only thing discouraging American car buyers at the moment is a paucity of small vehicles that they want to buy. Everyone expects the next couple of months to be rough much as May was, as Japanese brands overcome their dislocation and their competitors tinker with production, marketing and pricing strategies meant to cement their recent market-share gains into permanent territory.

Industry economists on Wednesday said that U.S.-market sales would probably reach a seasonal rate of 14 million or more units by late summer or early fall after full production by Japanese brands is restored, making up much of what Ford estimated was a second-quarter production loss of 300,000 to 400,000 units for the American market. Both GM and Ford executives said they are sticking with their early-2011 forecasts of full-year sales of 13 million to 13.5 million units. Edmunds.com Chief Economist also for now is standing by her forecast of a 12.9-million-unit year.

But meeting those numbers depends on the continued interest of American car buyers. And their interest, in turn, depends on a continued gradual recovery of the U.S. economy. The recovery has been anything but smooth, with a continued swoon in the housing market, stubborn unemployment, and unreliable consumer confidence battling for momentum with rising business confidence and investment, the possibility of further moderation in gas prices, and an outlook by the American consumer that seems to be more optimistic for the long term than it is for right now. Industry executives also continue to swear that a lot of pent-up demand for vehicles remains yet unsatisfied. By the end of the summer, the picture should have cleared considerably.

May 2011 Sales v TCI GM.jpgGeneral Motors: Taking Advantage
GM reported a 1-percent decline in overall May sales because of lower fleet volumes but posted a 9-percent rise in retail sales as its higher-mileage models capitalized on rising consumer demand for fuel-efficient vehicles -- and a lack of usual alternatives in Japanese brands. GM’s retail share of May sales was about 17.5 percent, the company said, about 1.5 percentage points ahead of the year-earlier period. For May, GM reported 221,192 sales, compared with 223,822 sales a year earlier.

The company has gained retail share in the U.S. for each month so far this year but one, Johnson said, as well as on a total-market basis. Because of raw demand for fuel-efficient vehicles, he said, GM was able to cut its incentive levels by more than 10 percent from April, marking the third consecutive month of a decline in that measure since the automaker startled the industry in January with a huge market-share grab on the back of unexpectedly aggressive incentives.

May 2011 CT Mix GM.jpgThe level of GM’s incentive spending as a result of its average transaction price was third-lowest among major OEMs, he said -- though it was slightly above the industry average for the month because the industry average also declined dramatically. “As inventories build again” in coming months with the restoration of more Japanese production, he said, GM expects its incentives as a percentage of prices “will start to rise... It’s clear that our intent in general is to have our incentives as a percentage of [average transaction prices] in line with the industry,” Johnson said. “We’re still on a path to be where we need to be for the year.”

Johnson said that GM’s fleet volumes declined by 16 percent compared with a year ago as daily-rental volumes dipped by 21 percent. But he called it a “planned” reduction due to “seasonal factors” and “nothing surprising.” Fleets fell to less than 32 percent of GM’s overall sales mix last month, compared with 37 percent a year ago. For all of 2011, Johnson said, GM expects fleet sales to represent about one-quarter of its sales, below a year ago.

But sales of GM’s cars were up 32 percent at retail, and sales of GM crossovers rose by 17 percent over May 2010, underscoring the strength of the move by American consumers toward fuel efficiency. Retail sales of GM’s newest vehicles -- Chevrolet Equinox, Silverado HD, Cruze, Camaro Convertible, and Volt; Buick LaCrosse and Regal; GMC Sierra HD and Terrain; and Cadillac SRX, CTS Wagon and CTS Coupe -- jumped 65 percent in May and were up by 74 percent year-to-date. Over half of Chevrolet sales for the month were four-cylinder engines.

May 2011 YTD Sales GM.jpgCruze, GM’s new compact sedan, led the surge, with sales of 18,996 at retail, the best month since its launch late last year. Cruze sales also were 150 percent above the levels of the Cobalt model that it replaced. Right now, Cruze inventories are at about a 37-day supply, far short of the level that dealers typically are comfortable with. The highest-mileage Eco version of Cruze attracted 15 percent of sales for the make. “Cruze is attracting large numbers of new customers to Chevrolet,” Johnson said. “It helped the brand gain retail share in key markets including California, Florida and New York.” He said that Cruze continued to demand about a $2,000 price premium over rival Toyota Corolla and Honda Civic models.

Buick reported a 24-percent increase in total sales for May, which provided the 20th straight month of retail-sales gains for the brand. More than half of buyers of the newest Buick model, Regal, are coming to the car from non-GM brands. Retail sales for GMC vehicles rose by about 5 percent in the month. Cadillac retail sales grew by 6 percent, though a decline in fleet sales pulled down Cadillac’s overall figure to an 8-percent decrease. CTS Coupe sales led the CTS make to a 28-percent increase for May over a year earlier.

Sales of the Chevrolet Silverado pickup-truck line overall were down 16 percent in May as consumers generally drifted away from trucks to smaller and more fuel-efficient vehicles. Truck inventories for GM at the end of May were more than ample, Johnson said, and mentioned that “truck inventories are always higher because of the complexity of the product. No doubt we’ll have the opportunity to shift the mix a bit, toward more crew cabs and heavy-duty versions.” The company recently announced the addition of output at its Flint, Mich., truck-manufacturing complex.

But Johnson said that, for the industry as a whole, full-size pickups still amount to about 10.4 percent of the market for the year to date, down only slightly from 10.6 percent at the same point a year ago. And he still expects the segment to recover a bit for the full year, to about 11 percent of the total market. At this point, Johnson said that, despite a lull in demand for pickup trucks and rising demand for smaller vehicles, GM wasn’t ready to announce any shifts in its production plans for the rest of the year.

May 2011 Sales v TCI Ford.jpgFord: Hemmed In
Ford’s sales picture in May looked about the same as GM’s on a relative basis: Its sales were almost exactly flat with a year ago, at 192,102 vehicles for the month. But Ford executives looked at the glass, in a sense, as being half-empty rather than adopting GM’s half-full view. That’s because Ford’s leaders and its dealers believe they could have sold a lot more vehicles, especially their small-car models, if only they’d had more available. The difference in perspective might stem in part from the fact that Ford has enjoyed a relatively strong couple of years, even through the Great Recession, and reasonably expects uninterrupted momentum in sales growth, while its larger rival is still getting up off the floor.

May 2011 CT Mix Ford.jpg“Our inventories continue to be lean,” Czubay said, at an overall level of a 50-some days’ supply. At the same time, however, Czubay said that dealers are getting a “continuous flow” of sales of the new Fiesta, Focus and Explorer from inventories on their lots, relatively thin as they might be. “Many cars have customers waiting for them, and they’re turning very quickly.” He said that Ford dealers in May sold 63 percent of Fiesta units, and 58 percent of Focus purchases off their lots. “As long as you can do that, you don’t need a lot of inventory,” Czubay said.

Ford executives believe the out-sized demand for their fuel-efficient vehicles will continue, so they announced on Wednesday that the company will be boosting third-quarter production 8 percent over the third quarter of 2010, to about 630,000 vehicles in the United States, or about 225,000 cars and 405,000 trucks and utility vehicles. Its forecast for final second-quarter output remained unchanged at about 710,000 vehicles, which is about 9 percent more than a year earlier.

Another reflection of Ford’s inventory position was that Ford’s average transaction prices in May were about 4 percent higher than a year earlier, Pipas said, even though the share of its overall sales represented by small cars was about 6 percentage points higher. Its incentive spending in May was on average down slightly from April and “very close” to industry averages, but it was “down quite substantially” compared with a year ago, he said. Ford’s newest products, mainly small cars, have been “major contributors” to these trends, he said, which are “starting to debunk the myth that people [won’t] equip and purchase them in a way that could lead to higher transaction prices.”

May 2011 YTD Sales Ford.jpgAt the same time, Czubay challenged the notion that the insatiable demand for its smaller vehicles led to some kind of unreasonable pricing leverage for Ford over American consumers. “Our dealers will always be competitive in the marketplace,” he said. “They’re telling us that their prices are a reflection of consumers’ desire to buy our cars because of our value proposition. Consumers will set the price in the marketplace, and they’re voting with their wallets that Ford is the preferred model.”

Overall, Ford retail sales were up about 5 percent in May, while its fleet sales declined by 8 percent. Year-earlier results included about 9,000 sales of Mercury-brand cars, but Ford has discontinued the brand since then. Fleet sales were about 34 percent of Ford’s overall total in May, 3 percentage points lower than a year ago; year-to-date, the figure also was 34 percent, about 2 percentage points lower than the same period in 2010. Declines stemmed from less business from daily-rental-fleet customers, Pipas said.

Ford’s two all-new small cars, Fiesta and Focus, combined had sales of 29,423 in May, up 74 percent from a year ago and comprising Ford’s best small-car month since May 2008, the last time that U.S. gasoline prices were surging. Fiesta enjoyed close to a 20-percent share of the entire subcompact segment, Czubay said, driven by fuel economy but also because consumers recognize that the car brings innovations in technology and style as well. About 18 percent of Fiesta purchasers are buying a vehicle for the first time, the highest percentage of any Ford model and a good harbinger for the brand’s future. Focus’s share of retail compact sales grew to 9 percent in May from 6 percent in April as the company reached full-volume production and supply of the new model. Czubay also highlighted how both Fiesta and Focus are taking share of the crucial California small-car market that are significantly outsized compared with Ford’s historical performance there.

At the same time, the new Ford Explorer has become one of the brand’s “fastest-moving vehicles,” with improved fuel economy over the old version that has become “a big closing tool for dealers.” The Explorer make in May enjoyed its best sales month in nearly four years. But sales of Ford’s F Series pickup trucks declined by 15 percent in May under the weight of higher gasoline prices, the first year-to-year monthly sales drop-off for the franchise after 17 consecutive months. Retail truck buyers -- versus commercial purchasers -- accounted for only 9 percent of F Series business in May, down from 12 percent in April.

But Pipas noted that Ford had trimmed F Series production plans earlier in the year, so that truck inventories “are in awesome shape,” and Ford won’t be required to layer on huge new incentives to move F Series units later in the year. June begins with F Series inventories in a normal 60-day range, he said, “and we’re in a very strong position. I wouldn’t expect to see much in the way of a crazy summer sell-down at the end of the model year on F Series."

May 2011 Sales v TCI Chrysler.jpgChrysler: Unfamiliar Territory
Toyota’s pratfall is the main reason that Chrysler managed to sneak back into the traditional Big Three for May, but the American company did have some legitimate reasons to crow about its return. Chrysler sales rose 10 percent in May over a year earlier, to 115,363 units, as the company continued a comeback fueled by new products and effective marketing – and marked its best May results since 2008, before its sales and financial woes led to its bailout by the federal government and Fiat. “May was the first time that Chrysler had out-sold Toyota in five years,” Caldwell said. “But it was more of a Toyota story than a Chrysler story.”

May 2011 CT Mix Chrysler.jpgStill, Chrysler retail sales were up 27 percent in May over a year earlier. Chrysler executives noted that the company’s all-new or significantly refreshed 2011 models are driving monthly sales gains, including the Chrysler 200, the Dodge Durango, the Jeep Grand Cherokee and Jeep Compass, and the 2012 Fiat 500. Chrysler 200 sales were up 154 percent in May over the Sebring that it replaced. All Jeep-brand models posted year-over-year sales gains in May, led by the Grand Cherokee’s 192 percent, and Compass with 92 percent.

Dodge brand sales were down 5 percent in May compared with a year earlier, possibly restrained by concerns about fuel economy for its performance-oriented models. Sales of Avenger, Charger and Challenger sporty sedans all fell by double-digit percentages, although the new Durango SUV posted more than 4,000 sales in an indication of a revival of the once-moribund nameplate. Chrysler brand didn’t offer much good news to Chrysler, either, with May 2011 YTD Sales Chrysler.jpgTown & Country minivan sales off a remarkable 50 percent even though minivans are relatively good fuel-efficiency performers for their size. Sales of 300 were down by 28 percent as the brand awaits the new model. Fiat sold 1,789 500 models through a selected group of Chrysler dealers as the model just started to work its way onto American shores.

But the reason Chrysler could take advantage of the opportunity to unseat Toyota in the top three OEMs, temporarily at least, was robust truck sales. Ram-brand sales were up 13 percent for the month even while GM and Ford reported pickup-sales declines. It was Ram’s 13th consecutive month of year-over-year sales gains. “Regardless of gas prices,” Caldwell said, “Chrysler continues to sell with a high penetration of trucks in the market – about 70 percent of its sales in May” were trucks and SUVs. “It has a lot to do with all the new models they’ve introduced into the marketplace.” Fred Diaz, CEO of the Ram brand, told AutoObserver that Ram is marketing “not only the great capabilities of our trucks but also that you get all of that outstanding capacity and a V-8 engine that still gives you 20mpg with the cylinder-deactivation feature. It’s a big push that we’re undertaking as the Ram truck brand."

May 2011 Sales v TCI Toyota.jpgToyota: Battered, Not Broken
No mistaking, it wasn’t a good month for Toyota Motor Sales USA Inc. The production cutbacks resulting from parts-supply shortages after March’s earthquake and tsunami in Japan ate up the slack in Toyota’s supply-chain inventories and dragged the world’s No. 1 automaker down 33.4 percent in May to 108,387 sales. Of the Big 7 automakers (including the Hyundai-Kia group), Toyota’s monthly sales trailed GM, Ford and even Chrysler (for the first time in five years) and barely nicked ahead of Hyundai-Kia at 107,426.

May 2011 CT Mix Toyota.jpgBob Carter, group vice president and general manager of the Toyota Division, pegged as much of the decline on the company’s decision to dial back incentives in the early part of the month because of inventory concerns, admitting that “the sales pace slowed,” after the pullback on spiffs. By the middle of May, he said, the company’s production outlook had rapidly improved and some incentive programs were reinstated. “We really had two different months in May,” he said.

The two different Mays resulted in a pounding sales decline, however. Either customers stayed away because of the lack of incentives or Toyota couldn’t fulfill the demand from the showroom traffic it did generate. The month left the Toyota division down 37 percent and the Lexus upscale unit off by 51 percent. At a time of heightened consumer angst about high gasoline prices, Toyota’s most glaring losses were the 51-percent plummet for the Prius hybrid-electric vehicle and a 59-percent dive for the Yaris subcompact. Camry and Corolla sales respectively slid by 35 percent and 37 percent and Highlander, typically one of Toyota’s stronger models, trailed most of its midsize crossover competition in May.

May 2011 YTD Sales Toyota.jpgHigh gas prices surely also played into the 49-percent drop for the Tundra fullsize pickup, although the Tacoma midsize pickup pulled out a 5-percent gain. The only Toyota- or Scion-brand cars or trucks to post a sales increase in May were the Scion tC and xD and the Tacoma. At the Lexus unit, every model except for the new CT 200h hybrid hatchback, which had no prior-year sales with which to compare, declined for the month. And for the first half, sales are down for every Lexus model except for the LX midsize SUV.

Overall, sales at the Lexus division were off 44 percent to 12,305 sales for the month. Dampened sales of the HS 250h hybrid, probably only partially explained by the company’s inventory deficiencies, were down 84 percent and the Camry-based ES was off by more than 50 percent. “Despite limited availability, there are some highlights” in Lexus’ May sales, said division chief Mark Templin -- but those highlights were difficult to find.

At the end of May, supplies of the Prius were down to 10 days and the Corolla to 35 days, but Toyota executives promised a swift moderation to the production-based inventory shortages. Carter said Toyota’s North American production will be back to 70 percent of normal levels by the end of June, with “eight key models, including Camry, Corolla, Sienna and Highlander all expected to hit 100 percent production levels this month.”

“We’ve reached the low point of product flow,” promised Randy Pflughaupt, TMS vice president for administration and the executive responsible for Toyota’s distribution operations.

May 2011 Sales v TCI Honda.jpgHonda: Could’ve Been Worse
Honda Motor Co. Ltd. certainly had its share of difficulties related to the Japan natural disaster, including heavy damage at its R&D facility in Tochigi, but despite North American production cutbacks of about 50 percent, the company’s U.S. sales managed to hang in for a comparatively palatable drop of 22.5 percent to 90,773. Sales for the Fit subcompact were up 46.3 percent as customers gravitated to overtly fuel-efficient choices, but every other passenger car in Honda’s lineup was down by double digits, including a 34.5-percent drop for the Accord and a 30.2-percent decline for the Civic, despite the launch of the all-new 2012 model.

May 2011 YTD Sales Honda.jpgMay 2011 CT Mix Honda.jpg

The unusual decline markedly skewed Honda’s car-truck sales mix, noted Edmunds.com pricing and industry analyst Ivan Drury. In May, 2010, Honda’s trucks accounted for 53.2 percent of its sales mix. This year, truck sales comprised 58.4 percent of all Honda U.S. sales, he said. Meanwhile, the Accord’s plunge to 18,185 sales for the month dropped it behind all its major competitors, including the Hyundai Sonata (22,754), Nissan Altima (25,525) and the aging Chevrolet Malibu (25,600).

The Acura upscale division’s sales of 9,000 units represented a 23-percent drop compared with May, 2010. Sales for every Acura car declined, led by a 58.4-percent drop for the RL flagship to 58 units. The TSX entry-level sedan dropped by 32.4 percent. Acura’s only gainer for May was the MDX midsize crossover, which posted a 1.9-percent improvement. The RDX compact crossover slid by 25.4 percent to 1,042 sales and the ultra-niche ZDX wagon sold 128 units, a 54.4-percent falloff.

May 2011 Sales v TCI Nissan.jpgNissan: Tight Fuel-Sipper Inventory
Nissan North America, which includes the Nissan and Infiniti brands, got caught short of its fuel-sipping models in strong demand with high gas prices. In total, the Japanese automaker sold 76,148 Nissan and Infiniti models, down 9.1 percent from a year ago. Nissan Division sales were off 7.8 percent to 69,759 vehicles; Infiniti sales slid 21.0 percent to 6,389 vehicles.

May 2011 CT Mix Nissan.jpgOn the bright side, Nissan had its best month so far for its all-electric Leaf, selling 1,142 units with supplies finally starting to catch up with orders. May sales account for roughly half of what the automaker has sold since the EV went on sale in December. “It’s onward and upward from here,” Al Castignetti, Nissan Division vice president and general manager, told AutoObserver in an interview. Also on the plus side was the midsize Nissan Altima, with sales up 16 percent to 25,525 units.

In contrast, sales of other Nissan models that have been extremely popular this year with high gas prices were down, due to supply shortages caused by the March earthquake in Japan, Castignetti said. He expects inventories to build as Nissan returns to roughly full capacity in June and throughout the summer. Sales of the Versa, of which a revised version goes on sale in July, plunged a hefty 51.3 percent. Sentra sales fell 14.2 percent. Juke, also in short supply, still chipped in 1,984 units as it sells beyond what Nissan America executives anticipated. Cube sales continued to decline, 34.6 percent from May to May.

May 2011 YTD Sales Nissan.jpgThe tiny volume GT-R had sales juiced by a higher horsepower model to 847 sold, a 48.3 percent hike. But 370Z sports car sales were off 30.4 percent. Along with other full-size cars, the Maxima had sales fall by 32.3 percent. Every Nissan truck and SUV suffered a sales decline May-to-May in the double digits. The Rogue, popular with the fuel-conscious CUV crowd, has been in short supply. But other body-on-frame models declined due to gas prices. The exception was the Frontier, which Castignetti surmises had a 25-percent increase because buyers who absolutely needed a truck opted for a more fuel-efficient one.

The only Infiniti model to buck the downward trend of double-digit drops was the recently redesigned large, luxury QX56 SUV, proving once again people with money want what they want regardless of price or gas prices, noted Infiniti chief Ben Poore in an interview with AutoObserver. QX56 sales, rising every month, had sales of 779 units, an 11-percent rise over a year ago. So far this year, Nissan North America has sold 433,032 vehicles, a 15.2-percent rise; Nissan brand is up 16.4 percent; Infiniti has climbed 5.1 percent.

Hyundai: Another Record May
Hyundai set a new May record for sales of 59,214 units, up 21 percent compared with the same record-breaking period last year. May 2011 also marked the fifth consecutive month that Hyundai has set an all-time monthly sales record. "With high gas prices continuing to alter consumer behavior, car buyers are increasingly looking at Hyundai's fuel-efficient line-up, with the all-new Accent, Elantra sedan, and Sonata Hybrid all delivering 40 miles per gallon, standard," said Dave Zuchowski, Hyundai Motor America's executive vice president of national sales. Indeed, Hyundai boasts that 34 percent of its sales are of models with 40 mpg status, up even from the 27 percent so far this year.

Elantra sales soared to 20,006 units sold in May, making it No. 3 among compact cars ahead of the Toyota Corolla and Honda Civic and behind the Chevrolet Cruze and Ford Focus. Sonata sales outpaced even last May’s big numbers with 22,754 sold, ranking it No. 4 in the midsize sedan segment ahead of Toyota Camry and Honda Accord. Accent sales plunged, though the model is being phased out to usher in the new version. On the premium side, Genesis' growth continued with sales of 2,769 units in May, the 23rd consecutive month of year-over-year sales increases. Equus kicked in 221 sales, exceeding targets, the company said.

For the year, Hyundai sales are up 29 percent to 263,588 vehicles sold. While Hyundai said sales were strong in all regions of the country, California was the brightest spot, with sales up 95 percent so far in 2011 vs. last year. California has been one of Hyundai’s biggest challenges because it is where it sold the bulk of its quality-plagued early models, leaving a trail of unhappy customers that have been slower to give the Korean automaker another chance than has the rest of the country.
 
Kia: Best-Ever Month
Kia sold the most vehicles ever in any month at 48,212 units sold, up a hardy 53.4 percent from a year ago. "Kia's record performance this year, and in the last three months, is a testament to our comprehensive and fuel-efficient vehicle lineup, which offers world-class styling and cutting-edge technology to today's discerning shoppers," said Byung Mo Ahn, group president and CEO of KMA and Kia Motors Manufacturing Georgia.

The Sorento was Kia’s best seller with 11,936 sold in May, ranking it No. 3 among compact SUVs behind the Ford Escape and Honda CR-V and ahead of the venerable Toyota RAV4. The Optima, which also comes in hybrid form, is off to the same kind of roaring start as its cousin, the Hyundai Sonata, with sales of 7,431 in May, from just over 2,000 a year ago. The hamsters in Kia ads apparently did the trick with sales of the Soul skyrocketing 11,157 units, its best-ever month, and a huge increase from last year’s respectable 6,134 sold. In May, Kia surpassed the 200,000-vehicle sales mark for the year, up 44.8 percent from the 138,163 sold in the same five-month period last year.

May 2011 Large Truck Sales.jpgMay 2011 Compact Car Sales.jpg

Volkswagen: Backing Things Up
Just a few days after the grand opening of its new U.S. assembly plant in Chattanooga, Tenn., Volkswagen underscored its new seriousness about the U.S. market by posting its best sales month in America since August 2003. Volkswagen sales were 30,100 units in May, up 28 percent over May 2010; for the year, Volkswagen sales were 20 percent higher. The numbers represent a significant achievement considering that VW currently lacks the new Passat mid-size sedan -- the vehicle being built initially in Tennessee -- and the new Beetle, which are expected to comprise two of the three most important vehicles in VW’s U.S. lineup by year’s end.

Sales of VW’s new Jetta sedan led the way, rising 71 percent in May compared with a year ago, while sales of the small-volume Golf compact nevertheless increased by 23 percent. Volkswagen executives have said that the availability of clean-diesel versions of its Jetta is a big contributor to the vehicle’s popularity, given the huge fuel-economy advantages of VW’s Turbo Diesel Injection (TDI) power trains at a time of higher gasoline prices. The Tiguan SUV sold more than 3,000 units during the month, up 58 percent.

“Breaking through the 30,000 mark without either Beetle or Passat in the mix speaks volumes about our momentum,” said Jonathan Browning, president and CEO of Volkswagen of America. “And I see the momentum continuing” as the new models are launched in the fall.

Meanwhile, the company’s Audi luxury brand continued to rack up sales gains in May, with sales rising 14 percent and making the third-best month in the brand’s history in the U.S. market. Buyers responded significantly to the new A7, the company said, and the A8 flagship sedan also performed well. Clean diesel also was a big factor in sales of some Audi models, notably the A3, where the option represented 55 percent of the sales mix. “Audi is on track to capture the leadership position in the U.S. luxury market, asserted Johan de Nysschen, president of Audi of America. BMW and Mercedes, and perhaps even Lexus, may have a thing or two to say about that, however.

BMW Group: Wearing The Luxury Crown
The BMW Group, which includes the BMW and Mini brands, captured the luxury car sales crown in May with sales of 26,452 vehicles, an increase of 19.7 percent from May a year ago. “This month, BMW and Mini sales progress continues in what’s clearly a yo-yo economy as consumer sentiment varies from optimism to pessimism month-to-month,” said Jim O’Donnell, President and CEO, BMW of North America. “We believe it’s having a steady run of new models as we’ve just added the new 6 Series Convertible to the new X3 and 5 Series to further drive BMW sales, and Mini is no different because of the new Countryman as well as higher gas prices increasing small vehicle focus.”

BMW brand sales increased 15.6 percent to 20,651 vehicles. One of May’s best performers was the recently revamped BMW X3 built in South Carolina. The 5 Series posted an impressive 83.5-percent gain; the 7 Series also saw a hike. Sales of the volume-leading 3 Series, however, dropped as did sales of the 1 Series. As happens when gas prices are high, Mini sales rose in May to 5,801 vehicles, a 37-percent increase. So far this year, BMW Group sales are up 18.7 percent to 116,656 vehicles. BMW brand sales are 13 percent higher, led by increases largely in the utility segment with the X3, X5 and X6 all posting hefty gains. Mini sales are up 56.3 percent to 24,588 vehicles.

Daimler: Best May Since 2008
Daimler AG, which includes the Mercedes-Benz and smart brands sold 20,306 vehicles, up 5.9 percent from a year ago. Of those, Mercedes sold 20,306 vehicles, up 5.9 percent from a year ago for its best May since 2008; smart sold a scant 492 twofour models, down 29.2 percent from last year, which was not a good one either. Daimler, which takes over distribution rights for smart from the Penske Automotive Group, put the best spin it could on smart sales, noting it was a five percent increase from April, the third consecutive month of month-to-month increase and the highest monthly sales so far this year.

Mercedes’ volume performers were the E- and C-Class model lines. E-Class led the pack with sales of 5,751, up 5 percent from a year ago. C-Class sales totaled 4,936, down 3 percent. The GLK-Class, finished third in volume with monthly sales of 2,214, up 22.1 percent. R-Class sales rose 237 percent. Sales of Mercedes diesel models were up 108.5 percent (1,147 versus 550). At the high end, the company sold 21 SLS AMG supercars for a total so far of 330. Sales of Sprinter Vans also increased by 126.1 percent for the month, with sales of 1,420. Year to date, Daimler has sold 97.,683 Mercedes, smart and Sprinter vehicles, up 8.5 percent. Of the total, Mercedes accounts for 90,274 of those for a 5.7 percent increase from the same period in 2010.

May 2011 Minivan Sales.jpgMay 2011 Muscle Car Sales.jpg

Subaru: Struck By Supply Shortages
Subaru, which has been chalking up record after record, was hit by severe supply shortages that hurt May sales. Total sales came in at 20,036 vehicles, down 15.3 percent from a year ago. All but the Outback and Legacy, built in the Indiana, posted double-digit declines: Forester, down 34.9 percent to 5,193 vehicles; Impreza, down 38.6 percent to 2,610 units; Tribeca, off 18.6 percent to 184 units. Sales of Subaru’s best-seller, the Outback, rose 10.5 percent to 8,431 units. Legacy sales were up 1 percent at 3,618 units. For both models, it was their best May ever.

"While we have had a very strong start to 2011, and demand for our products in dealerships remains at record levels, we are now experiencing a slowdown in deliveries following the disruption to vehicle and parts production in Japan as a result of the March earthquake and tsunami," said Thomas J. Doll, executive vice president and chief operating officer, Subaru of America, Inc.

"We expect this (inventory situation) to continue in the short term while the production situation in Japan returns to normal,” Doll added. “Even allowing for this temporary slowdown in deliveries, we still expect 2011 to be the second best year ever for the Subaru brand in the U.S." For the year so far, Subaru has sold 112,255 vehicles, still 7.6 percent ahead of last year.

Mazda: Sales Fall 21%
Mazda reported May sales of 17,875 vehicles, down 20.9 percent versus May of 2010.  Only two models in the line were in positive territory: the Mazda5, with sales of 1,628, up 14.3 percent for its best May since 2008; and the RX-8 of which Mazda sold 23 more this May than last for a total of 123. After five consecutive months of increases, the CX-7 (-20.2%) and CX-9 (-16.7%) crossovers had their first year-to-year sales drops. So far this year, Mazda is ahead of 2010, selling 103,072 vehicles, a 5.7 percent increase over the same period a year ago.

Audi: Best Ever U.S. May
Audi reported the best U.S. May sales in company history, and its fifth-consecutive record-setting month for 2011. May 2011 sales were up 13.6% to 10,457 vehicles sold, compared to 9,205 vehicles sold in May 2010. This May was also the third-best sales month in Audi of America history. Audi recorded year-over-year sales increases with seven of its models: A3, A4, A8, Q5, Q7, R8 and TT. Even Audi CPO is on the sales record program (3,470 units), posting double digit YOY (33.7%) and YTD (39.3%) gains in its fourth consecutive record sales month.

The A4 lineup led the Audi model sales mix with 3,192 unit sales, though up just 0.1 percent from May 2010 sales of 3,189 units. The Audi Q5 SUV netted 2,222 sales in May, a 9.1-percent increase from its May 2010 sales of 2,037 units. Sales of the A5 coupe and A6 sedan were down 18.2 percent and 40.1 percent respectively – a new A6 is due this fall in the U.S. The just introduced A7 lux-hatch managed 812 sales in May, while the revamped A8 sedan continues to eclipse last year’s sales numbers -- its 495 sales were a 661.5-percent increase over the previous-gen A8 on sale in May of 2010.

Audi’s diesel offerings likely contributed to the YOY sales boost of the compact A3 (up 33.9% to 664 units) and full size Q7 SUV (up 26.9% to 845 units). The Q7 managed a diesel take rate of 40 percent, May A3 sales were 55 percent diesel. Audi’s sports cars also fared well in May, with the R8 supercar enjoying a 135.7-percent YOY sales increase to 99 May 2011 sales. The Audi TT coupe and roadster saw a 30.2% percent gain over the same period last year to 220 vehicles sold.

May 2011 Box Car Sales.jpgMay 2011 Adv Drive Sales.jpg

Mitsubishi: 60-Percent Surge
Mitsubishi sold 7,568 vehicles in May, an increase of 59.8 percent from a year ago. Last month marked Mitsubishi’s highest May sales since 2008 and its ninth month of year-over-year sales increase. Year-to date sales are up 60.7 percent. “Since January, we have dramatically and consistently improved our sales and reached a new base level,” said MMNA President & CEO Yoichi Yokozawa. “It is no accident that our rapid sales rise coincides with the launch of Outlander Sport, with its fuel efficient powertrain which meets today's consumer demand,” said Yokozawa. Outlander Sport sales in May were among the highest since the vehicle was introduced last October.”

In addition to Outlander sport, Lancer sales were up 1.5 percent; Lancer Evolution sales rose 8.6 percent; Galant sales posted a 166-percent gain; and Endeavor sales improved more than 43 percent. Mitsubishi noted that May sales of vehicles manufactured at its Normal, Ill., plant were almost three times (up 197 percent) May 2010 sales and have almost doubled (up 97 percent) the first five months of the year.

Volvo: Best Month Since March 2008
Volvo reported sales of 7,359 vehicles, a 58 percent increase from a year ago for its best month since March 2008. Sales were led by the S60 sedan, with 2,405 sold in March. Year-to-date sales are up 25.8 percent over the first five months of 2010.

Jaguar Land Rover: Both Up
Jaguar Land Rover North America sold 4,162 vehicles in May, up 13 percent from last May. Land Rover sold 2,891 vehicles in May, up 7 percent; Jaguar sales were 1,271 units, up 32 percent."The Jaguar and Land Rover brands both had strong sales in May," said Andy Goss, President, Jaguar Land Rover North America. "Jaguar had its highest volume sales of the year and Land Rover showed consistent growth across all its full-size SUVs."

The Range Rover Sport was the volume leader with 1,213 units sold, a 12-percent increase. LR4 sales rose 8 percent to 683 units. Range Rover sales of 803 units were up 8 percent. Jaguar had its best month of 2011. The new Jaguar XJ hit 559 units, the Jaguar XF hit 521 units and the Jaguar XK sold 191 units.

Porsche: Sales Up 50 Percent
Porsche had its best May since 2007 with sales up nearly 50 percent largely due to a superb month for the Cayenne. Though an anathema to purists, Porsche’s strategy of looking to its Cayenne SUV and large Panamera sedan instead of traditional sports cars is working. May sales were 2,817 units compared to 1,873 units in May of 2010. Porsche’s YTD sales stand at 12,996 units, a 47-percent increase compared to the 8,842-unit mark it held at May’s end in 2010.

The Cayenne SUV led all May model sales with 1,258 units, with the Panamera sedan taking the second spot at 616 units, narrowly ahead of the 911 (612 units). The Boxster/Cayman mid-engine line was the sole negative for May, netting 331 units sales compared to 532 units in 2010. For the month, Porsche's Certified Pre-Owned (CPO) vehicle sales were down slightly to 753 units, compared to 796 last year, though YTD, CPO sales are up (3,596 units compared to 3,220 last year).

Suzuki: Another Month Of Gains
Suzuki sold 2,290 vehicles, up 20 percent from last May for its eight consecutive year-over-year sales increase. SX4 remained the brand’s top seller with 1,112 sold, a 26-percent gain. But the Kizashi kicked in 622 units, for an 89-percent hike. Year to date, Suzuki has sold 11,124 vehicles, a 17-percent rise over 2010.

Saab: Awaiting New Model
Saab sold 385 cars in May, up from 174 a year ago. Of those, 292 were of the 9-3; 93 were of the 9-5. The new 9-4X goes on sale in June.

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dg0472 says: 5:40 PM, 06.01.11

Exactly who predicted Hyundai would pass Honda? I never saw that. What I saw was that Hyundai-Kia would surpass Toyota and Honda and Chrysler. While Chrysler did much better than expected, H-K was within 1K of Toyota, including Scion and Lexus, and in fact DID easily pass Honda/Acura.

dg0472 says: 5:41 PM, 06.01.11

Exactly who predicted Hyundai would pass Honda? I never saw that. What I saw was that Hyundai-Kia would surpass Toyota and Honda and Chrysler. While Chrysler did much better than expected, H-K was within 1K of Toyota, including Scion and Lexus, and in fact DID easily pass Honda/Acura.

michellekrebs says: 3:42 AM, 06.02.11

Edmunds.com forecasted that Hyundai-Kia combined would surpass Honda (including Acura) in May, but would not surpass Toyota (and all of its brands). http://www.autoobserver.com/2011/05/122-million-saar-seen-for-may-honda-clobbered.html That's precisely what happened in May. Another analyst predicted that Hyundai-Kia would surpass Toyota. That did not happen, though it was close. Thanks for your comment. Editor-in-Chief Michelle Krebs

1487 says: 5:46 AM, 06.02.11

MOre needs to be said about Acura and Infiniti- they are not doing well and this has been the case for a while, its not tsunamic related. Infiniti and Acura are now being outsold by Audi and Infiniti is barely ahead of last place Lincoln.

Chrysler has to get credit for its performance, while it wouldnt have been #3 without Toyota's troubles the fact its Chrysler has outperformed Toyota and Honda all year in terms of sales gains. Why did their 10% gain have to be dismissed by saying its more of a Toyota story than a Chrysler story? chrysler did better than GM or Ford last month in terms of % gain so they must be doing something right.

carguy58 says: 9:24 AM, 06.02.11

1487: Infiniti has been doing decent. I mean they don't have enough cars in inventory because of the Tsnaumi maybe. Acura wasn't doing to well before because of the beak grille on the TL but they fixed that and it looks like a nice car now but then the Tsnaumi came when they fixed it. That was just an unfortunate break for Acura.

carguy58 says: 9:37 AM, 06.02.11

GM is keeping their incentives in line with sales from what it looks like on the graph there. That is very nice to see that GM is going for profits and not going for the biggest sales numbers like the old GM used to do.

Chrysler has some nice stuff like refreshes of the Charger and 300, a new Durango, and a Cherokee that is selling reasonably well.

Where is Hyundai's graph for sales vs incentives because Hyundai is becoming a big player now!

dg0472 says: 9:52 AM, 06.02.11

Yes, to clarify I was talking about the analyst, as NBC would say, on another site. I knew what Edmunds had forecast, but didn't think anyone on AO would take a swipe at that. But nowhere had I seen where there were any prognostications that Hyundai alone would overtake Honda. Sorry if that confused anyone.

1487, I'd also note that in Canada there have been several months where Chrysler has passed GM and is behind YTD by about 1,500 units.

carguy58, looks like overall the D3 are going better at keeping sales not directly related to incentives than the J3. These charts are very telling. As for Hyundai, AO used to report on H-K as a group but stopped without real explanation. Rumor has it that it was because the companies didn't like that because they don't report jointly and the folks in Seoul want them to operate as independently as possible.

1487 says: 1:12 PM, 06.02.11

Infiniti is usually stuck under 10,000 units a month and they havent been doing great this year. I guess the G is aging but they do have the M and the QX. Infiniti was outsold by Lincoln last month which cant be a good thing.

The TL is only part of Acura's problem. TSX sales are stagnant and RDX is old and slow selling. I dont need to mention the RL. MDX is only strong product for Acura right now. TL and TSX are way below their historical levels in sales.

carguy58 says: 5:07 PM, 06.02.11

1487: Your saying Lincoln outsold Infinti last month but did you forget the Tsunami which I was just talking about? Infiniti doesn't have a full inventory or maybe they have to save the inventory they have because of a inventory shortfall in future months of this year.

I agree with you with your view on the RDX in that it is old and the MDX respectively. The TL they messed that up with the beak grille so thats why sales weren't good. The TSX I haven't looked at how sales wise that is doing.

openeyes1 says: 12:21 AM, 06.03.11

@carguy58; Just wait until the novelty of the new Chrysler vehicle wears off with the buyer, in the world of high priced gasoline they will regret their choice. They will surely wonder why on earth they bought a Chrysler Gas Guzzler, and from a company that has abandoned fuel efficient small car technology for Gas Pigs with new prettier bows.

It is truly a sad day for SAAB, from the company that gave us 5-door FWD highway Gazelles like the 900/9-3 to Mountain Goats like the 96, now comes the overweight GM-ized sloth the Gas Gulping 9-4x. Maybe they can sell it in China, or a few in the Western Markets, but without a small 5-door hatchback SAAB is done for it (the fork please).

1487 says: 6:25 AM, 06.03.11

Chryslers minivans nor RWD sedan get poor mileage and the LX sedans will get an 8 speed for their V6s this fall which will boost mileage to 30mpg highway. Plus the V6 versions of the 200/Avenger are near tops in class at 19/29. Chrysler lacks compact cars but that makes their performance even more impressive. The JGC gets mediocre mileage but is flying off dealer lots because it looks good and has a strong repuation. People still buy SUVs when gas prices are close to $4 a gallon- lots of them.

@carguy:

Infitniti's sales havent looked great for a while now, even before the quake they were struggling to stay ahead of Lincoln and Audi, now Audi has surpassed them by a large margin. Cadillac is ahead of them by a nearly 2-1 margin as well with a small lineup. Infiniti cannot break into the top tier of luxury brands in terms of sales.

openeyes1 says: 11:09 AM, 06.03.11

@1487; Below are the MPG figures for 2011 Chrysler's from the US Government, as I said in my previous post its only a matter of time until the Auto buying public figures it out, Chrysler sells mostly Gas Guzzlers. I believe Chrysler can do better than this, they need to drop some gas pigs and bring back the pocket rockets they were once known for.


Chrysler 200 19-21 MPG
Chrysler 300 15-18 MPG
Challenger 14-18 MPG
Charger 15-18 MPG
Minivan T&C 17 MPG
Compass 21-23 MPG
Liberty 15 MPG
Wrangler 15 MPG
Cherokee 13-16 MPG
Dakota 14 MPG
Ram 1500 13-14 MPG
Durango 16 MPG
Journey 17 MPG
Nitro 16 MPG

These figures are from the 2011 Federal Fuel Economy Guide, NON-E85 Engines
and using city MPG figures. The city MPG figures are more representative of how and where Americans drive.


bb49 says: 2:37 AM, 06.04.11

Hopefully, the Honda/Acura sales decline continues as maybe it will force Honda out of its "coma" and it will actually be introducing cars with innovative, world beating technology instead of the tweaked platforms with too many carryover powertrains and features that Honda is introducing as it seems to be just satisfied with being somewhat competitive rather than the class leader. If the May sales figures for the 2012 Civic are any indication perhaps it is an indication that the informed car buyer agrees with me that while the new Civic is improved---Honda did not do enough to make it the class leader or the best buy in this class of cars. Honda still has retained its dated 5 speed automatic and has not adopted any direct injection or turbo charging to its old 1.8 liter engine (if it had the Civic would have had the absolute best gas mileage in this class). If I were in the market for a car in the Civic class, I would chose the Focus or Elantra easily over the 2012 Civic.

carguy58 says: 4:12 PM, 06.04.11

bb49: Honda does not have enough cars till November and December comes around because of the Tsunami. However, I am diisapointed with the styling of the Accord 4dr and the Pilot. The RL needs a huge makeover as well. I do agree though they should have done more with the 2012 Civic on the exterior too although the 2006-2011 Civic was a class leader.

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