DETROIT — Americans shrugged off fewer discounts and a scary stock market plunge last month, snapping up new automobiles and delivering another month of higher sales for carmakers.
The industry's double-digit jump in sales shows that consumers feel the economy is healthy enough for them to buy a new car or truck, as it's easier to get a car loan and gas prices are holding steady. May marked the seventh straight month of year-over-year sales increases for the auto industry.
"Clearly, we are in a recovery," said Jeff Schuster, executive director of global forecasting for J.D. Power.
Ford, General Motors and Chrysler saw strong sales gains over the same month last year — a bleak month for the industry as GM headed into bankruptcy and Chrysler was already there. Most Asian and European-based automakers also posted big gains.
The exception was Toyota, which has been relying on generous discounts the past three months to keep its sales afloat following massive safety recalls that began last fall.
Consumers who visited dealerships last month saw fewer deals. The average per-vehicle spending on incentives — promotions ranging from cash-back rebates to zero-percent financing — was $2,603 per vehicle in May, down 1 percent from April and almost 12 percent from May 2009, according to auto information company Edmunds.com.
Incentives are lower than in previous years because deep production cuts have left dealers with lean lots, making them less eager to cut prices, Schuster said. Incentives are likely to remain stable through the summer, he said.
Industrywide, sales rose more than 19 percent in May vs. last year, and 12.3 percent compared with April, to 1.1 million vehicles, according to Autodata Corp. At May's selling pace, automakers would sell 11.6 million car and trucks all year.
Relatively low gasoline prices helped boost sales of some big sport utility vehicles. GM reported that Chevrolet Suburban sales more than doubled. Ford's big Expedition saw an 18 percent sales jump.
Drivers won't change buying habits unless they see 20 or 30 percent gas price spikes, said Rebecca Lindland, autos analyst at IHS-Global Insight. At the same time, sales of big SUVs have been low for the past two years, she said.
"There is some pent-up demand for these kinds of vehicles," she said. "Consumers that need these vehicles for the size of their family, towing, going off-road."