Image: Chevy sedans
Steven Senne  /  AP
2011 Chevrolet sedans are seen reflected in the grill of a Chevrolet truck on the lot of a dealership in Norwood, Mass. GM's U.S. sales fell 1.2 percent last month, as falling pickup truck sales offset strong sales of more fuel-efficient cars and crossovers.
updated 6/1/2011 3:27:55 PM ET 2011-06-01T19:27:55

U.S. auto sales cooled off in May as dealers started running short on some popular, fuel-efficient models and buyers were turned off by sharply lower incentives.

Deals aren't likely to come back until the end of this summer. Some experts are advising people to delay their purchases if they can.

"If you don't have to buy, wait until fall. If you lease a car, extend it," said chief Jeremy Anwyl.

Consumers heard that message in May. U.S. auto sales were expected to be around 1 million cars and trucks, down 8 percent from April and 4 percent from last May.

Toyota Motor Corp. and Honda Motor Co. and Nissan Motor Co., all of which ran short of models due to parts shortages caused by the March 11 earthquake in Japan, had the biggest sales declines, with Toyota down 33 percent, Honda off 23 percent and Nissan off 9 percent compared with May of last year.

General Motors Corp. sales dropped 1.2 percent, as falling pickup truck sales offset strong sales of more fuel-efficient cars and crossovers. It was the same story at Ford Motor Co., which saw sales fall 2.4 percent for the month. Pickup sales dropped more than 10 percent at both companies.

Once again, small, compact and midsize car sales were up and truck sales were down because of high gas prices.

At Ford, where the F-Series pickup is traditionally the top-selling vehicle in the U.S., fuel economy clearly was driving sales. For the first time in decades, the company sold more F-150s with V6 engines (55 percent) than it did with larger V8s.

Despite a raft of bad economic data in the past few days, automakers generally said they were still optimistic for the year, with Ford and GM sticking with annual forecasts of around 13 million in U.S. sales. That's far short of the 2000 peak of 17.3 million, but better than the 10.4 million trough in 2009.

Ford even increased third-quarter production by 8 percent over last year, and its chief economist, Ellen Hughes-Cromwick, said there was good economic news with the bad, including moderating of gas prices, low interest rates and better availability of loans.

"We caution against reading too much into the monthly data," she said.

Don Johnson, GM's vice president of sales, said consumers are taking a wait-and-see approach as gas prices fluctuate around $4 per gallon. Construction remains weak, hurting truck sales.

Even so, Johnson feels consumer confidence over the long term remains strong and sees pent-up demand among drivers who kept their vehicles longer than usual during the recession. He expects sales and incentive spending to rise toward the end of the summer.

"All things considered, we continue to believe the recovery remains on track," he said.

Automakers usually use the warmer months to cut deals and clear out old inventory to make way for new models in the fall. But this year, they don't have many of last year's models sitting around. Japanese automakers had to cut production after the earthquake and domestic automakers can't produce cars any faster. Automakers are also raising prices to make up for the higher price of steel and other commodities.

The car companies offered their lowest incentives in six years last month, according to Edmunds, spending an average of $2,094 per vehicle on sweeteners such as rebates and low-interest loans. That's flat from April and nearly 20 percent lower than in May of 2010. Prices on Japanese cars have risen an average of $610 per vehicle since the quake, Edmunds said.

Shortages are the biggest reason. IHS Automotive estimates that the U.S. has around 400,000 fewer cars in inventory than it should have at the current sales pace. Toyota began May with only enough Prius hybrids for 10 days of sales. A 60-day supply is considered healthy.

As a result, the Prius, which is made in Japan, is now selling for 2 percent above the manufacturer's suggested retail price of $23,250, a $5,000 premium, according to Kelley Blue Book. Prior to the quake, it was selling for 1 to 2 percent below that price.

Even sales of some fuel-efficient small cars not affected by the earthquake are in tight supply. GM said it only has a 37-day supply of the Chevrolet Cruze small car.

Story: The hollowing out of Japan’s auto industry

Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book, expects prices to be high into the fall. Then a likely drop in gas prices and increases in Japanese production should bring them back to more normal levels. Honda Motor Co. said last week that its North American production will return to near-normal levels in August. But production of the popular, fuel-efficient Civic, which still lacks critical parts from Japan, will take longer to recover.

Rising prices prompted Bradd Levin of Stamford, Conn., to go ahead and buy a 2011 Honda Pilot in May. Levin and his wife are expecting their third child in December, so he was planning to buy a larger vehicle early this fall. He figured demand for the small SUV would be low because it's not as good on fuel as some smaller cars.

But Levin, a 35-year-old salesman at a plumbing supply business, was startled when Honda raised its annual percentage rate offer and took away a $750 cash incentive in May. Then, he heard from his dealer and others that Pilots with navigation could be in short supply because the chips used for them are made in Japan. He decided to buy the Pilot while he could still get a 2.9-percent rate and pay less than the suggested price.

Other automakers reporting Wednesday:

  • Volkswagen of America said its sales were up nearly 28 percent for the month, mainly due to a 59 percent increase in sales of its redesigned Jetta sedan and wagon. It was VW's best sales month in more than seven years.
  • Hyundai Motor Co. said its sales rose 21 percent in May to more than 59,000 vehicles, led by the redesigned Elantra compact car. Sales of the Elantra more than doubled to 20,000.
  • Kia Motors America sales were up 53 percent to more than 48,000, led by the Sorrento crossover, which was up 53 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: US autos make a comeback?

  1. Closed captioning of: US autos make a comeback?

    >>> good things come in small packages, the message out of detroit. u.s. car manufacturers are staging what it many industry analysts are calling an astounding comeback. according to latest numbers, gm and ford are positioned to reap the biggest rewards from their latest strategy. which is not only helped them jobs and accelerate sales but reverse course from financial disaster. who deserve the credit and will it translate to long-term success from the industry at large? jennifer granholme has insight. governor, nice to see you. i want to start out with how positive you must feel about hearing the resounding bounce-back that's happening. you led michigan through this brutal economic downturn , so much of this resulted from a meltdown in the automotive and manufacturing sectors, so what is your reaction as you're hearing this. too soon to be excited or can you say this is a relief in the news?

    >> it's a huge relief, and here in michigan we are really excited about this turnaround. two years ago today, two years ago today general motors filed for bankruptcy so this turnaround is incredible and truly thomas if it had not happened, this intervention on the part of the federal government had not happened, the obama administration had not rescued the automotive industry , michigan 's unemployment would be 20%, 1 million people unemployed, it's not just the auto industry but all of the industries that feed into the auto industry and not just the u.s. automakers but the international ones. everyone in the auto industry was asking the administration for a bailout, for a saving and in fact the rescue happened, this turnaround is incredible, and detroit is thinking small is beautiful, because they're turning out cars that are getting 40 miles per gallon and the sky is the limit.

    >> nothing wrong with baby steps to get us back on the right track. u.s. treasury secretary tim geithner recently wrote on op. ed to "the washington post " helping the auto industry get back on its feet. "nothing about the president's call was popular, it may have been more politically expedient to let chrysler fail but the president knew if chrysler collapsed tens of thousands of jobs would have been shed in the near term. a body blow to an economy already on the ropes." as you point out it's been two years to the day since chrysler filed for bankruptcy. looking back on this, hindsight being 20/20 how much was the obama administration making an educated gamble to see this bounce back?

    >> it was a political gamble and it was perhaps an economic gamble as well but the way it was structured and the intelligence with which this was executed they knew the bankruptcy had to be quick and had to get in and out and had to pre-negotiate the sacrifices that all of the stakeholders would have to take. they had to support the domestic auto industry verbally as well as financially to help get them through this period of time and they had to allow the auto companies themselves to run the companies who weren't going to have the government running the kpd companies, there was incredible effort and focus made on putting this together and truly when you think about it, thomas , if this hadn't happened, if they let chrysler or general motors go down this is the manufacturing or backbone of the country. you see the good news coming out of the economy, not a whole lot, but it has come from the manufacturing sector . if this auto salvation had not occurred the backbone of the manufacturing sector would have completely collapsed. you would have seen liquidation of manufacturing companies across the nation not just automotive, the glass industry, the rubber industry, the electronics industry , all of these suppliers that feed in to the most technologically advanced mass produced product in the world, the domestic auto industry . one other quick thing, we had a critical national need not just to save the manufacturing industry but also to lead us on a path to energy independence and when you think about for example general motors and the volt and doubling production, if you want to have a nation that is not reliant on countries that are adverse to our interest you got to start with the transportation sector and the auto industry and that's another great reason why this administration reaching in to save this industry was critical for the nation.

    >> that's what i wanted to get to. do you expect this to last and how do we keep this from being a temporary blip and are americans getting the fact that americans need to buy american to keep our car manufacturing companies in business?

    >> buy american! come on, people out there! we really need people to support the home team, support the people whoo are manufacturing this. we want to save our manufacturing infrastructure in this country. buy the products that are made by your fellow americans . buy companies established here in the united states . truly i so want people to understand the importance of creating middle class jobs in this country and the way you do that is by supporting those who are manufacturing those, but not just because out of emotion, but because they're good products and that's why the leading, to make this continue, what has to happen is a continued commitment to excellence and improvement, and that means improvement on fuel economy as well, the electric vehicle that the volt represents as well as others, i mean the batteries for that, used to be made in asia, now 40% of them are going to be made in the united states , those are jobs held by our citizens, manufacturing our means to energy independence . it's all good but we've got to continue on the path.

    >> it's great when americans make prideful decisions buying american but also great when they made a smart consumer decision to do so.

    >> of course, of course, and the auto industry would say that, too, you want to make the best product. you don't want people buying their product because they feel sorry for you.

    >> former governor jennifer granholm great to he soo you, thanks for your time.

    >> thanks, ? thomas . appreciate it.

Explainer: Ten most improved cars of 2011

  • Image: The 2011 Explorer on the all-media drive in San Diego, Californi
    Ford  /  Wieck
    Ford is selling Explorers as fast as it can build them.

    Among the crop of new cars out for 2011 it’s worth singling out those vehicles that have shown significant improvement.

    Like a sports team, when it comes to picking the best car you’ve got your veteran players who everyone expects to be great, and a couple who have gotten complacent and gone into decline but who still enjoy a reputation earned in better times.

    At the same time, some of the guys who have been around awhile and haven’t really performed like pros have really gotten their acts together during the off-season, returning with a form that is getting attention around the league.

    Here are our 10 candidates for the most improved car.

  • Buick Regal


    Buick Regal? Isn't that the official car of Florida's early bird specials? Are the seats made so the driver isn't visible from the car behind? This may have been true enough for the old Regal, but no more. The sleek, racy new Regal looks like nothing that would have graced Buick showroom just a few years ago. But two things have changed that. First was Buick's rise in China, where the brand is a top seller and the Regal is seen as a crucial ingredient to General Motors' ongoing success in the market. The other thing that happened was that the Saturn brand was shuttered in the GM bankruptcy, leaving GM with a model that had been planned for the Saturn division that was all dressed up with no place to go. So it became a Buick.

  • Chevrolet Cruze

    GM  /  Wieck

    OK, there was not an old Chevy Cruze for the new one to improve upon. But the Cruze replaced the Cobalt, which had some sound fundamentals, but was poorly executed and detailed. The new car enjoys a much bigger budget, as GM splurged on some nice cabin appointments so that the interior approaches within shouting distance of luxurious rather than living directly in downtown heinous. The Cruze is also sturdily constructed using large amounts of high-strength steel to eliminate the kinds of wobbles and rattles that have long plagued domestic economy models. And Chevy spared no expense outfitting the Cruz with safety equipment, making it a vastly superior option for young drivers.

  • Dodge Durango

    AJMueller  /  Dodge

    The original Durango was a monstrous, thirsty body-on-frame truck that had worse handling and fuel economy than the larger Chevy Suburban, but with less space inside than the Tahoe. The new Durango is built on a new unibody chassis shared with the Mercedes-Benz M-Class and R-Class crossover SUVs and it is outfitted with either the company’s new 3.6-liter Pentastar V6 engine or the latest version of the company’s heralded Hemi V8, with cylinder deactivation for better gas mileage when cruising on the highway. Mercedes’ ride and Hemi power? That’s a tough-to-beat combination.

  • Dodge Journey

    Dodge briefly ran tongue-in-cheek television commercials touting the Journey mid-sized crossover as the best car in the world. It was a joke because the old Journey obviously wasn’t, with its appalling cabin materials and thirsty V6 engine.

    But the 2011 Journey was the recipient of the company’s most lavish makeover, with a positively opulent interior that welcomes customers inside. Under the hood it also gets the new 3.6-liter Pentastar V6, with its accompanying improvements in power, smoothness and efficiency.

  • Ford Explorer

    Ford  /  Wieck

    This one-time darling of suburbia had fallen on hard times, as consumers turned their backs on truck-derived SUVs in favor of jacked-up station wagons. Still, the name held some equity, so while the crossover SUV Ford Freestyle and Taurus X flopped in the showroom, the thinking was that the Explorer name could attract buyers if it were a crossover. That guess has proved correct, as Ford is selling Explorers as fast as it can build them. The Explorer isn't just an improvement on the old trucky model, it is also an improvement on the Taurus X, the vehicle from which the new Explorer was derived. In an instance of less being more, a new Explorer based on the old Taurus X replaces both of those models and is more popular than they were combined.

  • Ford Focus

    Ford  /  Wieck

    Ford’s track record in the compact segment is so abysmal that the company has changed the name of its small model repeatedly over the years, from Falcon to Pinto to Escort to Focus. For a brief moment the company got the Focus right when it imported the European design to the U.S. 1999 and reached its pinnacle with the SVT high-performance edition in 2001. Unfortunately the company dropped the ball when the Focus reached the end of its natural lifespan by replacing it with an all-new car in other markets, but introducing a warmed over version with homely sedan styling for the U.S.

    For 2012 the all-new global Focus is the best in its segment, with refined materials and options that are normally available only in higher segments. Look for the Focus to be one of Ford’s sales heroes this year.

  • Hyundai Elantra

    Here’s a car that largely epitomized cheapness for many years. The old models were ugly and poorly made. But Hyundai’s dramatic turnaround in recent years included its compact model, and the previous edition was solid. The new one is more than that, it is a contender, along with the Ford Focus, for best-in-class honors in the compact segment. Hyundai’s astonishing improvements in powertrain engineering are a big reason why the Elantra is so improved. Its new 145-hp 1.8-liter engine matches with a standard six-speed transmission (either manual or automatic) to produce an impressive 40 mpg in highway driving without the use of hybrid technology or any special high-efficiency options that add cost.

  • Kia Sorento

    Jae C. Hong  /  AP

    When Hyundai was selling jalopies that quickly fell apart, one thing kept the brand out of last place in various quality and satisfaction surveys: Kia. That performance wasn’t sustainable, so Kia eventually fell into bankruptcy, from whence it was bought by Hyundai. Improbably, this combination has worked wonders for both companies.

    The new Kia Sorento is a sleek, stylish crossover SUV that has been winning plaudits from reviewers and now for 2012 it gains the super-efficient corporate 2.4-liter four-cylinder engine which boosts its fuel economy and performance.

    The Sorento is also Kia’s first U.S.-built product, coming from the company’s new plan in West Point, Ga. highway.

  • Kia Optima


    Kia also gets its own version of the widely-acclaimed Hyundai Sonata, which was new last year. The company’s mid-sized sedan goes from being an afterthought in the segment to a legitimate player, courtesy of its German styling (penned by an ex-Audi designer) and Korean engineering. The 200-hp 2.4-liter engine matches to a six-speed automatic or manual to produce 35 mpg on the highway.

    Sporty turbocharged and thrifty hybrid models are also available, helping Kia press its assault on a market where it has been largely overlooked for years.

  • Jeep Grand Cherokee


    The Jeep Grand Cherokee suffered during the years when the Jeep brand was controlled by then-DaimlerChrysler. Now that the company has split from the Germans and aligned itself with Fiat, the result has been, incredible as it may seem, a gigantic improvement. The old Grand Cherokee was as capable off-road as ever, but budget pressures robbed its once-luxurious cabin of premium materials, leaving it awash in hard, shiny plastics worthy of, well, Kias of the past.

    Today’s Grand Cherokee returns the premium materials to the cabin, while revving up the styling and installing the company’s efficient new Pentastar 3.6-liter V6 engine or the latest version of the powerful Hemi V8. For off-road enthusiasts it is a restoration of the Grand Cherokee to its deserved position as a premium off-road wagon.


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