Auto sales in the U.S. are expected to be around 1.6 million vehicles in May 2015, per Automotive News. The seasonally adjusted annualized rate of U.S. auto sales is projected to be around 17.3 million units in the month. This will be the highest sales level since Aug 2014 and the second-highest since Jan 2006.
The improvement in auto sales in May 2015 is expected on the back of rising demand for new vehicles compared with last year and higher replacement demand, coupled with cheaper gasoline prices and borrowing costs. In addition, warmer weather and better deals during the extended Memorial Day sales weekend, further boosted sales.
However, the rise in sales will be negatively impacted due to one less selling day in May this year, compared with last year. Automakers are expected to report their sales for the month of May on Jun 2.
In 2014, U.S. new-auto sales increased 6% to 16.9 million units. In 2015, new-vehicle sales are expected to rise by 2.4% to 16.9 million units. Sales increased 5.4% year over year in the first four months of 2015.
Let's look at the recent U.S. sales performance of individual automakers.
U.S. Automakers
General Motors Company GM recorded 953,095 vehicle sales in the first four months of 2015, up 5.5% year over year. After the automaker announced the monthly sales results on May 1, the share price of General Motors increased to $35.42, which represents a 2.3% year to date gain. Based on the macro factors, it is expected that General Motors will report better sales figures for May.
Ford Motor Co. F reported a 2.9% rise in U.S. sales from the year-ago period to 817,161 vehicles in the first four months of 2015. After the automaker announced the monthly sales results on May 1, the share price of Ford increased to $15.81, which represents a 4% year to date gain. Ford expects to record better sales in May.
FCA US LLC – controlled by Fiat Chrysler Automobiles FCAU – recorded a 6% year-over-year rise in sales to 694,881 vehicles in the first four months of 2015. After the automaker announced the monthly sales results on May 1, the share price of Fiat Chrysler surged to $14.65, which represents a 26.5% year to date gain. Based on the macro factors, it is expected that Fiat Chrysler will record better sales in May.
Japanese Automakers
Toyota Motor Corp.’s TM sales went up 8.1% year over year to 778,949 units in the first four months of 2015. After the automaker announced the monthly sales results on May 1, the share price of Toyota increased to $139.96, which represents a 11.5% year to date gain. Toyota is expected to record better sales in May.
Nissan Motor Co. Ltd. NSANY posted a 4% year-over-year increase in sales to 477,476 vehicles in the first four months of 2015. After the automaker announced the monthly sales results on May 1, the share price of Nissan surged to $20.8, which represents a 19.1% year to date gain. Nissan is also expected to record better sales in May.
Bottom Line
We believe that investing in these companies, which are expected to report strong sales results, should yield strong returns for your portfolio in the short term.
These auto stocks have recorded good sales performance in the recent past and are expected to report improved results in long term based on low fuel prices, low interest rates, rising wages and household wealth, and improving job security. Further, the ongoing recovery in the U.S. economy is leading to an improvement in consumer confidence.
Additionally, automakers are aiming to increase market share by offering large incentives and discounts to customers. Also, banks are offering more car loans with lower interest rates and longer repayment periods. Further, the high average age of cars on the U.S. roads is leading to high replacement demand for cars as well as car parts. All these factors are working in favor of auto sales in the U.S.
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