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Car sales held steady at a 16-million unit pace in May but domestic brands lost ground as Japanese automakers poured new money into the intense fight for market share.
General Motors finally saw its huge investment in incentives pay off last month as its sales increased by 4.1 percent.
Meanwhile, Ford Motor Co. dropped 1.8 percent as sales to fleet customers tailed off and the Chrysler Group lost more ground as its sales fell 3.3
Toyota Motor Sales U.S.A. Inc., however, reported its best-ever sales month in 46 years of business in the United States with total May sales of 186,764 vehicles, an increase of 6.1 percent. Year-to-date sales now stand at 747,641, up 2.1 percent over the same period last year, and leaves the Japanese carmaker only 250,000 units short of the 1 million unit mark with only half the year gone.
"Emerging signs of a strengthening economy, a much-anticipated tax break and a stock market showing hints of a comeback combined to fuel industry sales in May," said Jim Press, Toyota executive vice president and chief operating officer. "These positive signs will probably result in revised second-half industry sales forecasts."
Honda reported its sales, including totals from its Acura line, increased 18 percent last month on the basis of strong sales across its entire lineup.
"American Honda continues to grow by expanding into new light truck markets while boosting its momentum in automobiles with class-leading vehicle like the Honda Accord and Acura TSX," said Dick Colliver, executive vice president of American Honda Motor Co Inc. "Even in a tough market, both Honda and Acura divisions are showing remarkable success," he said.
Both Honda and Toyota clearly benefited from the aggressive pricing, said Paul Ballew, GM general director of market analysis.
Toyota, for example, managed to reverse a months-long slide in the sales of its full-size pickups by offering no-interest loans of up to 60 months. Sales of the Tundra pickup increased 15 percent in May as the incentives took hold.
"I really think that incentives are only one part of the pricing equation," Ballew added. "The reality is that all of the manufacturers have taken steps to reduce prices for consumers."
Jim O'Connor, Ford group vice president of North America Marketing, Sales and Service, said, "Although the U.S. economy is still in a period of slow growth, we believe the tax cut package and higher consumer spending will help to accelerate economic growth before the year is over.
"May sales were stronger than most forecasts," O'Connor added. "About 1.6 million customers purchased a new car or truck in May - the highest for any month since August 2002. After that, you have to go back to October 2001 to find a higher sales month," he said.
Officials from the Chrysler Group, which has taken a beating in the last couple of months, insisted that better days lie ahead.
"We are looking for the market to gain momentum this summer," said Gary Dilts, Chrysler Group senior vice president of sales. "We are in the midst of an extreme incentive war. Moving forward, it will be important to drive sales through great products, clear messages and our 'Best Values in America' (marketing program)."
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