Analysts believe that statistics may be enough to trigger a rally for Ford, FCA and GM stocks, after months of recalls and uninspiring growth figures have taken their toll on share prices.
Sales in May is approaching 1.6 million new cars and trucks, reaching a seasonally adjusted annual rate of approximately 17.4 million vehicles, while April was a tepid month but May could represent a big comeback, this credit goes to the low gasoline prices which are driving demand for trucks and sports utility vehicles, according to data from Edmunds.
“This is going to be one of the best months ever,” explains Mainstay Capital Management chief investment strategist David Kudla.
He forecasted the May statistics including sales hitting $40 billion, which is close to the record of $40.3 billion set on August 2014, he also noted that average age of cars in US is between ten and eleven years.
Another factor which can contribute to better sales is the recently concluded Memorial Day weekend.
Jessica Caldwell, Edmunds senior analyst said, “Because there was a full week of May after the holiday weekend, shoppers had plenty of time to take advantage of the deals being widely communicated in dealer and automaker marketing messages.”
One key driver is low prices, regarding the used car market. A large number of post leave vehicles returned, and getting sold as used cars.
Caldwell said, “There’s no sign that this surge in leasing will slow down anytime soon, so shoppers can continue to expect prices of these cars to stay relatively low as they continue to flood the secondhand market in the coming months and years.”
Yesterday at the close of the trading, GM was trading at 35.97, a decline of 1.15 percent, while Ford’s share prices were at $15.17, down 0.78 percent from the day prior.
Due to the recent stock buyback initiative, GM is up 3 percent year to date, while Ford is down 1.7 percent over the same period of time. Fiat Chrysler remained flat at $16.03.