USA: Incentive-fertilised spring selling season may show less bloom this year - report
The US motor industry's traditional strong spring new car and truck selling season may be weaker this year, as analysts predict weak May sales despite another round of incentives, Reuters reported.
With inventories already swollen and incentives running nearly 50% higher than a year ago, the news agency said, poor May sales could trigger more generous rebates and cut-rate loans while slow sales could also force steeper production cuts by Detroit's Big Three vehicle makers in the third quarter, putting a drag on any US economic recovery.
According to Reuters, the average forecast from motor industry analysts puts May's sales at a seasonally adjusted annual rate of about 16 million vehicles, above last May's rate of 15.7 million, but below April's pace of 16.4 million. Sales results will be released on June 3.
"The spring selling season continues to disappoint," Merrill Lynch analyst John Casesa said in a research note cited by Reuters. "May auto demand appears to be relatively unresponsive to continued incentive support."
Reuters said that, despite the recent incentive boom, Detroit motor industry executives have been more reticent than usual this month about predicting sales, saying the market was too uncertain to offer specific predictions.
Reuters noted that the two traditional economic drivers of vehicle sales - unemployment and consumer confidence - have been moving in opposite directions this month. New jobless claims have risen as the US economy shed half a million jobs between February and April but consumer confidence rose in May to a six-month high, buoying stock markets on expectations that consumer spending accounting for two-thirds of the US economy would remain robust.