Strong May Auto Sales Could Raise 2010 Forecasts; Toyota Lags a Bit
Based on strong early returns for U.S. auto sales in May, expect to see forecasters raise their 2010 sales forecasts a bit.
Forecasts for 2010 I've seen recently -- prior to the May sales results -- averaged about 11.8 million units. That would be about a 14 percent increase from sales of 10.4 million in 2009.
Through April, U.S. auto sales were up 17 percent from the year-ago period. If sales increased 17 percent for the whole year, that implies sales of about 12.2 million for the whole year.
Provided total May sales are in line with the first several car companies to report their monthly sales today, June 2, those earlier forecasts are probably too low. For that 11.8 million forecast to come true, auto sales would have to slow down in the rest of the year.
That's unlikely, since the second half of the year is usually better for auto sales. Model-year changeovers are mostly in the late summer and early fall. That means higher interest in the new models, and bigger discounts on the old models.
Ford (F) said its U.S. sales in May were up 23 percent; General Motors, up 32 percent; Chrysler, up 33 percent. Kia (KIMTF.PK) reported a May U.S. sales record, up 21 percent from a year ago. U.S. sales were up 35 percent for Subaru (FUJHY.PK).
Toyota's (TM) U.S. unit, which includes the Toyota, Lexus and Scion brands, brought down the average increase, with an increase of about 7 percent.
The relative slowdown at Toyota could have several causes. First, Toyota's reputation could be suffering from its ongoing recalls for unintended acceleration, but I think it's more likely because Toyota is trying to dial back on a record level of incentives it had in the previous couple of months.
According to Edmunds.com, Toyota's average incentive in May was $2,169, down from $2,329 in April. It's also likely that recent big U.S. sales increases for Toyota pulled ahead sales that would have happened in May.
"Inventory levels are relatively low, so many automakers have cut back on incentives," stated Jessica Caldwell, director of industry analysis for Edmunds.com.
Photo: Kia