May auto sales likely to beat forecasts

DETROIT - U.S. auto sales were stronger than expected in May, boosted by Memorial Day promotions and strong demand for new SUVs.

Analysts had expected sales to fall by around 1 percent, but Tuesday's sales reports were beating their expectations. Ford said overall sales likely grew around 1 percent over last May.

General Motors said its sales rose 3 percent over last May, while Fiat Chrysler's sales rose 4 percent. Both automakers benefited as buyers continued a steady shift from cars into small and medium-sized SUVs. Sales of the Jeep Cherokee SUV were up 23 percent, while sales of the GMC Acadia jumped 67 percent.

Volkswagen surprised with an 8 percent sales gain. Ford's sales fell 1 percent and Toyota's sales were flat.

May is typically one of the biggest sales months of the year, as buyers flush with tax returns look forward to summer road trips. Last May, sales jumped 11 percent to 1.6 million, their highest monthly total in nine years.

After five years of blistering growth after the recession, it's getting increasingly difficult for the industry to match those kinds of numbers. U.S. sales are expected to hit 17 million this year, near their historic peak of a decade ago, and automakers will have to work harder to post big gains.

But the industry isn't alarmed. Because of factory closures during the recession, output is closer to matching consumer demand, so car companies don't have to resort to as much expensive discounting as they did in the past.

Demand for new vehicles also remains healthy. In a sign of confidence, Ford is shortening its annual two-week summer break to one week at its six North American assembly plants, and FCA canceled its usual shutdown at four assembly plants in the U.S. and Mexico.

Analysts had forecast that lower sales to rental car companies and other fleets would drag down sales. But car buying site TrueCar.com said sales to individual buyers jumped 7 percent over Memorial Day weekend, thanks in part to promotions like zero-percent financing on the new Hyundai Sonata sedan.

GM's sales rose 3 percent to 293,097 vehicles. Sales of its best-seller, the Chevrolet Silverado pickup, rose 11 percent, and Buick's two small SUVs -- the Encore and Enclave -- both saw 20 percent gains. But car sales were weaker. Sales of the Chevrolet Cruze dropped 27 percent.

Ford's sales dropped 1 percent to 250,813 vehicles. Sales of its best-seller, the F-150 pickup, dropped 10 percent as the company continued to ramp up production of the newly redesigned truck at one of its two truck plants. Ford's U.S. sales chief, Mark LaNeve, said Ford had just half of its normal F-150 inventory at the beginning of the month. Ford also saw lower sales of the Escape and Explorer SUVs.

Toyota's sales were flat at 242,579. Toyota's SUV sales were up, led by the Highlander with a 25-percent increase. Lexus SUV sales were also strong thanks in part to the new NX small SUV. But Toyota's car sales dropped 11 percent.

FCA's sales rose 4 percent to 202,227 vehicles. It was the company's best May since 2005. Jeep sales rose 13 percent. Sales of FCA's best-seller, the Ram pickup, rose 8 percent, while sales of Ram's ProMaster van more than doubled.

Volkswagen's sales rose 8 percent to 34,758 thanks to sales of the new Golf, which nearly tripled over last May.