Analysts forecast 10% drop in May sales

Analysts forecast 10% drop in May sales

Gasoline prices were on the minds of most industry analysts today as the analysts generally predicted a 10 percent drop in May U.S. auto sales from the same month a year ago.

Gasoline at $4 a gallon has driven customers away from trucks and into smaller vehicles. As a result, analysts predict that General Motors, Ford Motor Co. and Chrysler LLC will suffer the steepest declines when automakers report their monthly results on Tuesday, June 3.

For May, analysts expect sales to drop 22 to 25 percent at GM and as much as 22 percent at Ford. Sales at Chrysler are also expected to be down by more than a fifth, according to analyst forecasts.

Honda Motor Co. is the only major automaker expected to post a gain in sales from a year ago. Edmunds Inc. says Honda should post a 3.2 percent gain over May 2007.

In addition to the fallout from high fuel prices, GM also faced vehicle shortages caused by the UAW strike at supplier American Axle & Manufacturing Holdings Inc. and against some GM assembly plants.

Truck losses offset car gains

"We are looking at May being another very rough month particularly with gas prices on a national basis coming up very close to four dollars and with consumer confidence really being quite low and really not a tremendous amount of activity from automakers," said Erich Merkle, an auto industry analyst with IRN Inc.

Edmunds forecasts new-vehicle sales of 1.4 million, down 10.8 percent from May 2007. Those sales, however, would be up 15.8 percent from a month ago.

The loss in truck sales will overrun any gains in the car segment. Automakers with limited truck lineups will benefit most in this environment.

Paul Taylor, the chief economist for the National Automobile Dealers Association, said Honda's small exposure to the truck market was the key factor behind its ability to post a gain for May.

"As a result of high gas prices, compact car and hybrid market share are predicted to reach an all-time high this month," Edmunds analyst Jesse Toprak said in a prepared statement.

Toyota sales down, market share up

Despite a softening overall market and even a projected drop in sales, Toyota Motor Corp. is expected to reach a record market share, Toprak said in the statement. Edmunds forecasts Toyota sales will drop 6.7 percent from May 2007. Still, Toyota's market share is expected to reach

18.1 percent, up from 17.3 percent in the same month last year and 17.5 percent from last month.

Analysts predicted annualized sales rates for May ranging from 14.2 million to 15 million. That rate was 14.4 million in April.

The projected May sales from the analysts are adjusted for one fewer selling day in May 2008 compared with May 2007.