DETROIT -- The U.S. auto industry saw its sales fall slightly in May for the first time since August 1998, due mostly to slower sales at General Motors Corp. and the Chrysler side of DaimlerChrysler AG.
While the total number of cars and light trucks sold last month was up slightly, to about 1.6 million, sales were down about 2 percent based on the daily sales rate; there were 26 selling days in May, one more than a year ago.General Motors Corp. said its sales were down 5.8 percent, with declines in cars and trucks. The Chrysler side of DaimlerChrysler AG said that May sales fell 18 percent from a year earlier.
Some automakers posted gains. Ford Motor Co. said its sales were up 1.1 percent, and import automakers as a group saw sales rise, although at a slower pace than the past few months.
"In general, manufacturers with new products seem to be doing well, and a lot of that product sells without incentives," said Greg Salchow, analyst with Raymond James & Associates. "On the other hand, if you have old product that's been in the marketplace a while, that's more of a challenge."
Industry experts say the sales figures reflect the pressures the Federal Reserve has put on the economy through interest-rate increases. The Federal Reserve has raised interest rates six times since June, including an aggressive half-point increase two weeks ago. The Fed is trying to slow the economy and keep inflation from becoming a problem. Other economic indicators also have found less enthusiasm among American consumers for large purchases. Demand for big-ticket goods in April took its biggest nose dive since late 1991, and consumer spending rose at its slowest pace in nine months.
Salchow and Susan Jacobs, an analyst with Jacobs & Associates, said interest rates were affecting consumers' minds more than their pocketbooks. Salchow noted that if the interest rate on a five-year, $20,000 loan rose from 8 percent to 9 percent, the monthly payment would go up $10. "I think the increase in interest rates and the wide fluctuations in the stock market are giving consumer reasons for pause," Jacobs said.