How will weak economic reports impact strong auto sales? Jessica Caldwell, Edmunds.com senior analyst and CNBC's Phil LeBeau discuss.
By Paul A. Eisenstein, msnbc.com contributor
With May sales showing another big surge, the U.S. auto industry is shoring up its position as one of the bright spots in the sputtering?American economy. But even with some makers reporting sales that nearly doubled last month, there are some potentially troubling issues behind the May figures.
Analysts and industry officials remain uncertain about whether the auto market can maintain its current, torrid pace, especially if other economic factors, such as the sharp slowdown in job growth and a slide in the stock market, begin to scare off potential buyers.
But for the moment, the May numbers leave reason to hope that car sales will well exceed cautious earlier forecasts for 2012.
Among the optimists is analyst Jesse Toprak, of data tracking firm TrueCar.com. "Sales are continuing to rebound and consumers are feeling more comfortable buying highly contented vehicles,? said Toprak, noting that four brands, Toyota, Honda, Hyundai and Kia, scored the highest average transaction prices ? the figure consumers actually pay after discounts ? in their history.
Toyota, meanwhile, saw its sales surge by over 87 percent?for the month, a significant turnaround for a maker that had suffered sharp declines throughout much of 2011.?Of course, the Japanese giant?s gains must be put into perspective.?Sales during May of last year reflected a low point during the aftermath of the devastating earthquake and tsunami that all but shut down the Japanese auto industry leaving dealers desperately short of product to sell.
But Toyota officials insist there were other factors behind the May revival. "Our growth has been driven by the success of our new products, led by the Camry and Prius family, part of the most aggressive product launch in our history," said Bob Carter, Toyota division general manager.
Fellow Japanese maker Honda, which was also hard hit by the March 2011 Japanese disaster posted an only slightly less impressive 47.6 percent?sales jump, 46 percent?at the flagship Honda brand and 62 percent or the Acura brand.
Japan?s second-largest maker, Nissan, meanwhile, saw its sales climb ?only? 20.5?percent?-- including both the Nissan and Infiniti brands.? But Nissan didn?t suffer quite as serious production-related sales losses in 2011 as the other two members of Japan?s Big Three.
The May numbers generated a series of superlatives: General Motors, with an 11 percent?increase year-over-year, posted its best sales since August 2009, during the government?s Cash-for-Clunkers program.
Audi was one of several makers to report its best-ever May, while its German sibling Volkswagen recorded the best May since 1973.?Even so, Jonathan Browning, CEO of the Volkswagen Group of America ? which also includes Bentley ? was surprisingly cautious during a conference call with reporters.
While GM recently raised its forecast for all of 2012 to a possible peak of 14.5 million vehicles, Browning said that for now VW will stick with a more conservative estimate of 13.9 million.
?We?re not ready to change our forecast,? said Browning, cautioning there are plenty of economic uncertainties that could lead to a softening of demand during the second half of 2012.? Indeed, Browning noted there was ?ebbing-and-flowing? in the marketplace during May, the month opening strong, softening notably and then ending with a big bang over the holiday weekend.
Analyst Art Spinella, of CNW Marketing, said that showed up in his firm?s ?Jitters Index,? a measure of how worried potential auto buyers are.? And there are plenty of reasons to be worried, from the uncertain U.S. job market to the decline of the stock market, never mind the potential crisis in the Euro Zone.?
On the other hand, AAA is reporting that nationwide fuel prices have tumbled an average of about 27 cents a gallon since their early-April peak.? And some petroleum industry observers believe that some parts of the country could soon see pump prices as low as $3, rather than the $4 to $5-a-gallon numbers once anticipated by summer 2012.
That?s already showing up in sliding demand and lower prices for certain used vehicles, especially smaller, high-mileage offerings.? In the new car market, demand for fuel-efficient models maintained a healthy pace, most makers reported ? but GM noted that sales of its full-size pickups rose 27% during May, more than twice the maker?s overall sales increase.
One alternative explanation is that as one of the basic tools of the American working class, the surge in pickup sales could suggest Main Street is recovering faster than Wall Street right now.
CNBC's Phil LeBeau reports the sales numbers on General Motors, up 10.9% vs. 11.4% estimate, while Toyota reported sales up 87.3% vs. 89.5% estimates.
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