DETROIT – Full-size pickups once again dominated U.S. auto sales in May, as small businesses – increasingly confident in the economy – raced to replace the aging pickups they held on to during the recession.
Car buyers, too, were lured by low interest rates and Memorial Day sales. Overall, U.S. consumers bought 1.4 million vehicles in May, up 8 percent from the same month a year ago, according to Autodata Corp.
The results suggest the auto industry will remain a bright spot in an economy that’s been slowed by weak manufacturing. And the boost from the industry will help sustain the economy’s steady job growth.
Most automakers topped analysts’ expectations last month, with Nissan reporting its highest May sales ever after cutting prices on seven popular models. Chrysler, Ford, Honda and Toyota also reported increases. Only Volkswagen’s sales were down from last May.
Automakers sold 173,972 full-size pickups in May, the highest total since a year-end rush last December, according to Ward’s AutoInfoBank. Sales of Ford’s F-Series pickup, which is the country’s best-selling vehicle, rose 31 percent to a six-year high of 71,604. General Motors and Chrysler also posted full-size truck sales gains of more than 20 percent.
Those sales have reverberated in the job market. Ford said in early May that it’s adding 2,000 workers to the Missouri plant that makes the F-150. From January through April, automakers and parts companies hired 14,600 workers, and the Center for Automotive Research expects them to add 35,000 over the full year.
Car dealers are also hiring, with the average number of employees rising from 53 to 55 last year, said the National Auto Dealers Association. More are expected to be hired this year.
The Federal Reserve’s low interest rate policies have helped nurture sales by keeping loan rates low. A 48-month new-car loan now averages 2.92 percent, according to Bankrate.com. And despite the weak manufacturing numbers, other bright spots – like home–building, and oil and gas drilling – are fueling the auto sales boom.
Home construction rose 12 percent in the first three months of this year, and builders – along with plumbers, landscapers and painters – need work vehicles. GM said sales of vans to small commercial buyers, or those with fleets of one to four vehicles, rose 17 percent in May.
Automakers are also selling more trucks in Texas, the Dakotas, Montana and elsewhere thanks to increased drilling. For the month ending May 24, U.S. oil production was up 18 percent to 7.3 million barrels per day, according to the Energy Department.
Strong sales of pickups in May – not typically a blowout month for trucks – signal that businesses feel more certain about the future, said Jesse Toprak, senior analyst for the TrueCar.com auto pricing site.
“Businesses tend to make better financial decisions because they have to,” he said. “They tend to wait longer. But when they do come back, they come back in large numbers.”
May sales wiped away a disappointing April, when the annualized rate for U.S. auto sales dropped below 15 million for the first time in six months. In May, the rate hit 15.3 million. Toprak said he’s now considering raising his forecast for full-year U.S. auto sales above 15.5 million. The industry sold 14.5 million vehicles in 2012.
Lacey Plache, the chief economist of car research site Edmunds.com, said consumer confidence – which hit a six-year high in May – is boosting sales for now. But without more jobs and income growth, that might not be sustainable. Some Americans are taking home less pay this year thanks to slow income growth and an increase in Social Security taxes.
“What is really needed is a continued and even expanded labor market recovery to give car buyers greater means to make car payments,” she said.