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Chrysler Reports 27% May Sales Surge to New Record

Automobiles: The increase is attributed to consumer discounts, low interest rates and low unemployment.

June 03, 1998|From Bloomberg News

Chrysler Corp. on Tuesday said its U.S. car and truck sales rose 27% in May--its best sales month ever with 250,031 vehicles sold--beating analyst expectations, as car buyers were lured by discounts and other offers.

The No. 3 auto maker also said sales of vans, pickups and sport-utility vehicles surged 39%, while car sales rose 4.7%.

May was the first time Chrysler's monthly sales have surpassed 250,000 vehicles. Analysts had expected a 19% rise over May sales a year ago.

Sales for Chrysler and other auto makers surged in May because of "loyalty" discounts up to $1,000 for existing owners and because of continued low interest rates and low unemployment. The percentage increase over a year ago also was magnified because a United Auto Workers strike closed a key truck-engine plant last year.

Industrywide sales had been weak in May 1997, when they fell 6% from a year earlier.

Chrysler's car sales last month rose partly because of a discounted lease program on the Intrepid version of its redesigned LH family sedans. Through this program, Intrepids can be leased for as little as $289 a month.

Truck sales rose on the popularity of the Durango sport-utility vehicle and Quad Cab pickup.

"I don't think demand is deteriorating at all," said Julie Coates, general manager of Manassas Dodge in Manassas, Va., who credited much of the success to the discount programs. "We sold a ton of Dodges and a ton of used cars in May. We had an excellent month."

Industrywide, sales are expected to rise to the strongest annual sales rate so far this year, about 15.7 million, up 7% from a strike-weakened comparison in the year-ago period. Honda Motor Co. reported a 19% increase Tuesday, while Toyota Motor Co. sales rose 17%. Ford Motor Co. is expected to post unchanged May sales today. General Motors Corp. is expected to report an increase of 10% from a strike-weakened year-ago comparison. Nissan Motor Co. is expected to report an 11% decline.

Chrysler stock inched up just 13 cents to $56 on the New York Stock Exchange, but it has rocketed 59% this year, boosted by its merger plans with Daimler-Benz.

Chrysler is expected to earn $1.41 a diluted share in the second quarter, up from strike-lowered earnings of 70 cents in the year-ago period, based on the average estimate in an IBES International Inc. analyst survey.

Chrysler's first-quarter earnings rose 2.2% to $1.05 billion, or $1.60 a diluted share, topping analyst estimates.

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