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US auto sales expected to beat forecasts in May thanks to strong Memorial Day, SUV boom

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 per cent, but Tuesday’s sales reports were beating their expectations. Ford said overall industry sales likely grew around 1 per cent over last May.

Subaru led automakers with a 12 per cent sales gain. General Motors’ sales rose 3 per cent, Fiat Chrysler was up 4 per cent and Honda rose 1 per cent.

All four automakers benefited as buyers continued a steady shift from cars into small and medium-sized SUVs. Honda sold more than 6,300 HR-V small SUVs in the first two weeks it was on sale. Sales of the GMC Acadia SUV jumped 67 per cent, while sales of the Jeep Cherokee were up 23 per cent. Sales of Subaru’s XV Crosstrek small SUV jumped 36 per cent.

Long-struggling Volkswagen surprised with an 8 per cent sales gain thanks to its new Golf. Ford’s sales fell 1 per cent. Nissan and Toyota said 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 per cent 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 is also healthy thanks to easing credit standards, improving employment numbers, lower gas prices and enticing new vehicles.

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 cancelled 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 per cent over Memorial Day weekend, thanks in part to promotions like zero-per cent financing on the new Hyundai Sonata sedan.

GM’s sales rose 3 per cent to 293,097 vehicles. Sales of its bestseller, the Chevrolet Silverado pickup, rose 11 per cent, and Buick’s two small SUVs — the Encore and Enclave — both saw 20 per cent gains. But car sales were weaker. Sales of the Chevrolet Cruze dropped 27 per cent.

Ford’s sales dropped 1 per cent to 250,813. Sales of its bestseller, the F-150 pickup, dropped 10 per cent as the company continued to ramp up production of the newly redesigned truck. 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-per cent increase. Lexus SUV sales were also strong thanks in part to the new NX small SUV. But Toyota’s car sales dropped 11 per cent.

FCA’s sales rose 4 per cent to 202,227, the company’s best May since 2005. Jeep sales rose 13 per cent. Sales of FCA’s bestseller, the Ram pickup, rose 8 per cent, while sales of Ram’s ProMaster van more than doubled.

Honda’s sales rose 1 per cent to 154,593 vehicles. Car sales were weak; Honda’s bestseller, the Civic sedan, was down 4.5 per cent. But sales of the Acura RDX SUV jumped 24 per cent.

Nissan’s sales were flat at 134,779. Sales of the recently redesigned Murano crossover were up 58 per cent, and the Rogue small SUV also saw strong sales. But Nissan’s car sales dropped 11 per cent.

Subaru’s sales were up 12 per cent to 49,561. Its biggest seller, the Forester SUV, saw a 7 per cent gain. Sales of the newly redesigned Legacy sedan climbed 64 per cent.

Volkswagen’s sales rose 8 per cent to 34,758 thanks to sales of the new Golf small car, which nearly tripled over last May.