Consumers Apply Brakes To Auto Sales Strikes, Shortages Blamed For 5.8 Percent Drop In May

U.S. auto sales fell 5.8 percent in May from the year-ago period, more than expected, as consumers retreated from strong first-quarter buying, strikes cut inventories, and Japanese automakers ran short of some models such as Toyota Motor Co.’s RAV-4 sport utility vehicle.

Ford Motor Co., the last major U.S. automaker to report its monthly sales, said Wednesday its U.S. car and truck sales in May fell 3.0 percent from the year-ago period, half the decrease that analysts expected.

The 5.8 percent decline was greater than the 4 percent analysts expected. Overall, U.S. light vehicles sold at a seasonally adjusted annual rate of 14.8 million units in May, down from 15.4 million a year ago. May’s rate was down from 15.5 million in the first quarter but up from 14.4 million in April.

“Sales will perk up to the high 14 million/low 15 million range over the next several months,” said Nicholas Lobaccaro, a Merrill Lynch analyst.

Sales weakened in May because overall consumer spending has flattened out, said Diane Swonk, an economist for First Chicago NBD. Spending will grow about 2 percent in the second quarter, she said, compared with 5.8 percent in the January-March period.

Sales should bounce back later in the year, Lobaccaro said, because other economic fundamentals are strong, including job growth, consumer confidence and low interest rates. Automakers will also boost rebates to maintain sales.

Thursday’s Ford results follow a 17 percent May sales decline reported on Monday by Chrysler Corp. and the 8.1 percent decline reported Wednesday by General Motors Corp. Toyota also reported a sales decline, its first since December.

Production at both Chrysler and GM was affected by United Auto Workers strikes in April and May. Among Detroit automakers, April and May sales were toughest on Chrysler, in part because of a now-resolved strike at a Detroit truck engine plant. The automaker has had to boost sales incentives to an average $950 currently, compared with $705 during the first quarter, a Lehman Brothers analyst said.