The pace of US auto sales hovered around 14.5 million vehicles last month, spurred by sales of cars and crossovers as the Japanese automakers bounce back from last year's earthquake-related vehicle shortages, analysts said.
The projected sales pace is roughly in line with the 14.4 million rate seen in March and April. A year ago at this time, the industry reported lower-than-expected sales, hurt by a shrinking supply of cars and vehicle prices that were too high for consumers trapped in a tepid economic recovery.
But now, the auto industry has recovered from those shortages, particularly Japan-based automakers. Incentives, which reduce the price of a vehicle for consumers, also have risen slightly.
Industry research firm TrueCar.com expects light vehicle sales to be up 32 per cent in May to the highest level in five years.The industry is now on the mend after its near-collapse in 2009 when General Motors Co and Chrysler filed for bankruptcy and sales fell to 10.4 million vehicles. By contrast, vehicle sales in the United States averaged around 16.7 million a year between 1998 and 2007.
Of all the major automakers, Toyota Motor Corp is expected to see the biggest bounce with a 90 per cent sales increase. Honda Motor Corp is expected to post a 50 per cent sales gain, according to research firm Edmunds.com.
Both of these companies sell far more cars than trucks. The Toyota Camry and Honda Accord were the second- and third-best selling cars last month, respectively.
"We expect that mid-size sedans will post the largest year-over-year share gains as key Japanese models had limited availability in May 2011," RBC Capital Markets analyst Joseph Spak wrote in a research note.
No. 1 US automaker GM will post an 11 per cent gain, while Ford Motor Co's sales will jump 16 per cent, according to Edmunds projections. Chrysler Group LLC is expected to jump 42 per cent.
Auto sales also have been one of the bright spots in the economy for several months. Vehicle purchases by consumers accounted for 30 per cent of US gross domestic product (GDP) growth in the fourth quarter of 2011 and the first quarter of 2012, according to Credit Suisse.
Sales have shot up despite cooling consumer confidence and mixed economic data that illustrates how the shaky the recovery has been over the last three years.
"At this point, it is almost as if the tail is wagging the dog," said Kelley Blue Book analyst Alec Gutierrez. "During a typical post-recession recovery, we would expect to see auto sector gains being driven by broad economic growth. In the first quarter, the opposite was true."
One factor fuelling the sales growth has been Americans' increasing need to replace their aging cars and trucks, which are now a record 10.8 years old on average.
Higher fuel prices in the first quarter prompted some consumers to swap those older, less fuel-efficient models to lock in fuel savings. According to UBS, 63 per cent of dealers said higher gasoline prices increased demand in the first quarter.
As a result, the pace of sales may "moderate" in the second and third quarters, but the underlying consumer appetite for new cars and trucks as a result of pent-up demand remains strong, UBS analyst Colin Langan said.
Since early April, the average price for a gallon of regular petrol has fallen about 7 per cent, US government data show. This has gradually pushed sales of trucks higher. Barclays Capital expects an 18 percent gain in truck sales in May and a 24 per cent increase in cars.