WRAPUP 3-US auto sales tick higher but caution lingers

* May U.S. sales auto sales up 19 pct from year earlier

* Ford sales up 22 pct, GM up 17 pct, Toyota lags at 7 pct

* Sales of trucks, SUVs up 22 pct as gasoline stays cheap

* Ford raises output plan, others see slow recovery intact
(Revises first paragraph, adds analyst comment, details on
truck sales, incentives, final sales rate for May)

By Soyoung Kim and Kevin Krolicki

DETROIT, June 2 (BestGrowthStock) – Ford Motor Co (F.N: ) and General
Motors Co [GM.UL] posted double-digit sales gains for May that
outpaced growth for Toyota Motor Corp (7203.T: ) as U.S. auto
sales rose 19 percent from the depressed levels of a year
earlier.

The monthly sales results, viewed as one of the earliest
snapshots of American consumer demand, were boosted by stronger
sales of trucks and SUVs and stepped-up orders for Detroit-made
vehicles by rental car agencies and other fleet operators,
including government agencies.

Industry-wide sales topped 1.1 million vehicles, the
seventh consecutive month that sales have gained from
year-earlier levels as the industry recovers from a crisis that
sent sales to the lowest levels since the early 1980s.

Analysts and auto executives said the May sales figures
pointed to a continued but gradual U.S. economic recovery that
remains held back by uncertainty about the jobs market, housing
prices and the impact of the European debt crisis.

“May looks solid but I wouldn’t say spectacular,” said Paul
Ballew, economist with Nationwide Mutual Insurance Co and
former GM sales analyst. “We’re not here forecasting a
derailment, but we expect the recovery to be pretty choppy.”

Ford Motor Co (F.N: ) outperformed rivals with a 22 percent
sales gain, taking market share along with Hyundai Motor Co
(005380.KS: ), which posted a 33 percent gain, and the Subaru
brand, which saw a 35 percent sales rise.

Ford said it was raising its current quarter production by
2 percent and set its third-quarter production target 16
percent above the level of the prior year.

Ford, which has overtaken Toyota as the No. 2 automaker in
the U.S. market this year, also said it was scrapping its niche
Mercury brand. [ID:nN02182713]

Shares of Ford, which have gained almost 19 percent this
year, rose nearly 4 percent on Wednesday.

Toyota Motor Corp (7203.T: ) lagged with a nearly 7 percent
sales gain after opting to keep sales incentives largely flat
from the deep discounts that won buyers in March and April.

GM sales were up 17 percent from sales a year earlier when
the top U.S. automaker was sliding toward a U.S.-government
funded bankruptcy.

Chrysler, which was operating in bankruptcy for all of May,
reported a monthly sales gain of 33 percent. For the year to
date, the automaker controlled by Fiat SpA (FIA.MI: ) is lagging
the industry with growth of 8 percent compared with 17 percent
for overall vehicle sales.

RETURN OF THE BAD NEWS

Nissan Motor Co (7201.T: ) reported a 24 percent sales gain
but said the month was marked by a renewed sense of caution by
consumers watching the job market and housing prices.

“The month of May seemed to me to mark the return of some
bad economic news,” said Al Castignetti, who heads Nissan brand
sales in the United States.

In May, the S&P 500 index (.SPX: ) fell more than 8 percent
in its worst monthly slide since February 2009 as investors
reacted to the threat that the European debt crisis could
trigger a renewed slowdown in the U.S. economy.

Bob Carter, general manager of the Toyota brand in the U.S.
market, said showroom traffic had dipped in the middle of the
month but had recovered by the Memorial Day weekend.

Toyota, which plans to roll out a new advertising campaign
touting its investment in safety in a bid to distance itself
from a recent recall crisis, said it would extend some
zero-percent financing and cheap lease offers in June.

Honda sales were up 19 percent, in line with the
industry-wide gains.

In an encouraging trend for Detroit-based automakers, sales
of light trucks, including pickups like the Ford F Series, were
up 22 percent in May. S&P equity analyst Efraim Levy said that
bounce appeared to point to “increased business demand for
these more profitable vehicles.”

By contrast, sales of luxury vehicles, which confounded
forecasts by lagging the market during the downturn, posted
sales gains of just 10 percent in May. (Graphic
http://link.reuters.com/mez77k)

BMW (BMWG.DE: ), which saw a parts shortage halt shipments of
most of its 2011 model vehicles in May, reported a sales
decline of almost 4 percent for the month.

NO V-SHAPED RECOVERY

On an annualized and adjusted basis, May sales hit a rate
of 11.6 million vehicles, according to sales tracking service
Autodata Corp. That was up from the 11 million sales rate that
had held from January through April, and up from the 27-year
low of 10.4 million sales recorded in 2009.

But the retail component of industry-wide sales was closer
to 8.8 million vehicles in May, down slightly from 8.9 million
in April, a GM representative said.

“We had never expected a V-shaped recovery,” said GM U.S.
sales chief Steve Carlisle.

Even so, GM said May results pointed toward the initial
success of its turnaround plan in the year since it filed for
Chapter 11 bankruptcy protection in June 2009.

The automaker is aiming for an initial public offering as
soon as this year to reduce the U.S. government’s ownership
stake of nearly 61 percent. Sales of the four brands kept by
the reorganized GM — Chevrolet, Cadillac, Buick and GMC —
were up 32 percent in May.

In a sign of the automaker’s success in holding the line on
pricing, GM said its average vehicle transaction price was up
$3,300 in the year to date compared with an industry-wide price
increase of just $1,600.

Edmunds.com, a Web service that tracks auto sales,
estimated that the average sales incentive on U.S. auto sales
in May was down almost 12 percent from a year earlier at just
over $2,600 per vehicle.

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(For more autos news see [ID:nCARS1])
(Reporting by By Soyoung Kim, Kevin Krolicki and David Bailey;
editing by Matthew Lewis)

WRAPUP 3-US auto sales tick higher but caution lingers