Ahead of the Bell: US auto sales rebound in May

May US auto sales likely rebounded 7 percent after slight slowdown in April

Associated Press

DETROIT (AP) -- U.S. auto sales rebounded in May, with Memorial Day sales and Nissan price cuts drawing buyers back into dealerships after a slower than expected April.

Analysts forecast sales will rise 7 percent from May 2012 to 1.4 million vehicles, putting the industry back on pace for full-year sales of more than 15 million. In April, the annualized rate dropped below 15 million for the first time in six months, causing some concern that the industry's gradual recovery could be slowing.

"May sales quickly chased away any of last month's concerns that the auto recovery is stalling," said Jessica Caldwell, a senior analyst at car-shopping site Edmunds.com. "This quick rebound is just another example of how the auto industry is currently one of the most resilient areas of the overall economy."

Auto companies are scheduled to report May sales on Monday.

Nissan's sales likely surged thanks to competitive pricing. Car buying site TrueCar.com estimated that Nissan's sales jumped 25 percent in May, the biggest increase of any major automaker.

Nissan announced in early May that it was lowering the price of seven models, including the recently redesigned Altima sedan. But even before that, the company was giving dealers aggressive credits so they could discount vehicles that were shipped to their lots before the price reduction. Cars and trucks with the higher sticker prices are now being discounted, and that's what drove Nissan's May sales increase, said Larry Dominique, a former Nissan product chief who is now executive vice president of TrueCar. Nissan is advertising no down payment and $1,000 cash on the Rogue crossover, for example.

"That certainly is stimulating a lot of sales and interest," Dominique said.

Nissan's goal was to hold average sales prices steady by cutting sticker prices while trimming discounts such as rebates by a like amount, Dominique said. TrueCar estimates that Nissan cut its incentive spending by 34 percent in May, to an average of $1,821 per vehicle. That's $660 lower than the industry average.

Whether the strategy works won't be known until the summer months, after dealers use up all the credits they got to sell existing inventory, Dominique said. Once the credits go away, Nissan's pricing strategy will be fully in operation, he said.

Full-size pickup trucks are also selling well as home construction continues to see double-digit growth. That benefits the Detroit automakers, who sell the vast majority of pickups in the U.S. Kelley Blue Book expects General Motors Corp., Ford Motor Co. and Chrysler Group all to see sales gains in the 6 percent to 8 percent range thanks to a 20 percent rise in pickup sales.

Memorial Day offers — such as Chevrolet's $500 cash rebate on top of other discounts — also juiced sales, Kelley Blue Book analyst Alec Gutierrez said.

Toyota Motor Co., whose Camry and Corolla sedans have been struggling in the face of newer rivals like the Honda Accord and Ford Fusion, is expected to report sales fell slightly from last May.

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