DETROIT (Reuters) - Consumers emboldened by easy-to-get loans and cheap gas pushed U.S. auto sales in May to their strongest pace in a decade, countering weakness in other economic indicators.
U.S. May auto sales hit 17.79 million last month on a seasonally adjusted annualized basis, according to Autodata Corp, the highest since summer 2005.
On Tuesday as automakers reported robust sales, data showed new orders for U.S. factory goods in April fell 0.4 percent, a day after a Federal Reserve official said second-quarter growth may be slower than expected.
Sales of pickup trucks and SUVs in May led the way again, which bodes well for profit margins of the major automakers. Consumers are snapping up trucks and sport utility vehicles as the national price of gasoline averaged $2.75 a gallon, nearly a dollar less than this time last year.
Consumers are finding it easier to obtain auto loans. Experian said nearly 30 percent of new-vehicle loans have payback periods longer than six years.
Industry sales are expected to top 17 million vehicles this year, besting the 16.94 million reported in 2005.
Ford Motor Co (F.N) sales fell 1 percent as its F-Series pickup trucks declined 10 percent. Its primary model, the F-150 pickup truck, remained in high demand and the company said it is reducing downtime at two plants this summer. Ford said F-150 sales will rise as production ramps up at its Kansas City, Missouri, plant.
For the second year in a row, May auto sales were boosted as more consumers returned to showrooms after a harsh winter, a GM spokesman said.
GM sales reached 293,097 vehicles on strong pickup truck and crossover sales. GM said its average sale prices in May rose $550 to about $34,000 per vehicle.
Fiat Chrysler’s U.S. sales hit 202,227 vehicles in May, the first time above 200,000 in any month since March 2007.
Automakers are still benefiting as consumers who put off buying new vehicles from 2008 to 2013 return to showrooms, said Dave Fish of MaritzCX, a market research firm. Maritz estimated that if automakers sell 17.1 million cars and light trucks this year in the United States, another 13 million older vehicles would still need to be replaced.
But he cautioned there were signs the recovery could have limits. Many younger consumers are delaying getting driver licenses or buying new cars, and households aren’t adding more cars, on average.
“It looks like the good times may roll for some time into the future,” Fish wrote in a report.
Additional reporting by Joseph White; Editing by Jeffrey Benkoe and Matthew Lewis