May auto sales up 2%, beating expectations

U.S. auto sales were stronger than expected in May, boosted by Memorial Day promotions and strong demand for new SUVs.

Sales rose 2% over May 2014 to more than 1.64 million cars and trucks, their fastest pace since July 2005, according to Autodata Corp. Analysts had expected sales to fall slightly because of lower sales to rental car companies and other auto fleets.

Subaru led automakers with a 12% sales gain. General Motors’ sales rose 3%, Fiat Chrysler was up 4% and Honda rose 1%.

All four automakers benefited as buyers continued a steady shift from cars into small and medium-size SUVs. Honda sold more than 6,300 HR-V small SUVs in the first two weeks it was on sale. Sales of the GMC Acadia SUV jumped 67%, while sales of the Jeep Cherokee were up 23%. Sales of Subaru’s XV Crosstrek small SUV jumped 36%.

Long-struggling Volkswagen surprised with an 8% sales gain thanks to its new Golf. Ford’s sales fell 1%. Nissan and Toyota said sales were f lat, while Hyundai’s sales fell 10%.

May is typically one of the biggest sales months of the year, as buyers flush with tax returns look forward to summer road trips.

After five years of blistering growth after the recession, it’s getting increasingly difficult for the industry to match those kinds of numbers. U.S. sales are expected to hit 17 million this year, near their historic peak of a decade ago, and automakers will have to work harder to post big gains.