US Automakers could see stock market action after strong May vehicle sales data
US automakers may witness a surge in shares. Next week’s May sales data is expected to touch record levels. Edmunds.com, a car buying platform, said a seasonally-adjusted annual rate of 17.4 million vehicles is likely to be matched by estimated sales of 1.6 million new cars and trucks in May.
David Kudla, chief investment strategist of Mainstay Capital Management in Grand Blanc, Michigan, said May sales are getting closer to $40 billion, not far from the $40.3 billion record in August 2014. Kudla said May 2015 appears to become one of the best months ever.
Decline in gas prices has triggered the sales of sports utility vehicles and trucks. Jessica Caldwell, senior analyst at Edmunds.com in Santa Monica, California, said that another big factor behind the jump in car sales is the timing of the Memorial Day holiday.
“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”, said Caldwell.
Jack Ablin, chief investment officer at BMO Private Bank in Chicago, said credit for auto loans has seen expansion, which is helping the sector to grow.
Caldwell added that a headwind was created by the strong dollar, and GM had to announce recalls from some high-profile products, but the current trend of rise in auto sales is not going to upset soon.
The auto market could be affected by rise in interest rates by the US Federal Reserve more quickly than expected.
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