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Now that Americans are buying homes, Detroit’s Big Three are coming back

Getty/Daniel Acker/Bloomberg
We’re baaaaaaack.
By Nandagopal J. Nair
Published Last updated This article is more than 2 years old.

Detroit’s Big Three made a comeback in May after a disappointing April.

Ford led the way with a 14 percent increase in sales, while Chrysler’s sales grew 11 percent, largely because of strong demand for pickup trucks and sports utility vehicles. Sales of Ford’s F-series pickup trucks were up 31 percent, while Chrysler’s Ram trucks reported a 24 percent increase. Even GM, which posted a modest three percent overall sales growth, reported strong sales for its Chevy Silverado.

Here’s why the boom in pickup sales (which helped US automakers outpace their Japanese and Korean rivals) is likely to continue:

1) Demand for light trucks has increased as housing has recovered, spurring growth in construction.

2) Consumers are responding to models that feature new technologies and improved fuel efficiency. Ford sold more hybrid vehicles in the first five months of 2013 than it has in any full year in its history. The Big Three have rolled out new or revamped models like the Ford Fusion, Chevy Dart and Cadillac ATS. GM has vowed to update 61% of its product line in two years.

3) Detroit’s Asian competitors are struggling. South Korea’s Hyundai & Kia are trying to repair their reputation, following findings by the the U.S. Environment Protection Agency that the companies overstated fuel economy ratings.

That said, in Japan, Abenomics is helping to boost sales for some carmakers. Nissan used the weakening yen to its advantage last month by offering heavy discounts to US consumers on seven of its top models; its sales increased 25 percent year-over-year in May. That hasn’t been the case for Toyota, the most successful Japanese carmaker in the U.S. Sales of two of its top three leading brands—Prius and Camry, have been flagging this year. The company has blamed falling fuel prices, and general boredom with the dowdy Camry.

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