Month of May bad for Auto Companies especially Ford and GM

Month of May bad for Auto Companies especially Ford and GM

The month of April was exciting for the auto industry with strong sales. However, things have taken a wrong turn this month with demands lessening up. This might lead to further cuts in the American Auto Giants GM and Ford.

A lot of it can be attribute to various factors like higher gas prices, rising car loan rates and weak consumer confidence. This was revealed by Burnham Securities analyst David Healy said in a research note to investors. We would have a clearer picture soon as the reports would be out on June 1.

The reason behind the rising prices of the cars has been due to reduced incentive spending by GM, Ford, and DaimlerChrysler AG’s Chrysler Group. They have risen by almost 1.8 percent since September. As per market estimates, the average incentives per vehicle have been around $3,700 by the top three auto manufactures in the US. This is $400 less than their peak in 2004.

However, the Japanese and other Asian car manufacturers would be doing relatively good this month. Companies like Toyota, Honda, and Nissan are likely to see increased sales. This has been due to increasing incentive spending by these companies on their car models.