U.S. auto sales seen up over seven percent in May: research firms

DETROIT (Reuters) - New-car sales in the United States are expected to rise more than 7 percent in May and continue the strong spring selling season as the month includes five weekends, two industry research firms said on Thursday.

With the help of the Memorial Day holiday weekend, total U.S. sales are expected to finish at more than 1.5 million vehicles, with the month's annual selling rate topping 16 million vehicles for the third straight month, according to J.D. Power and LMC Automotive. Sales to only retail customers are seen increasing even more strongly, up more than 8 percent.

The research firms also said they expect consumers to spend more than $37 billion purchasing new light vehicles this month, topping the previous May high of $34.3 billion in 2004. Monthly auto sales are seen as an early snapshot of consumer demand.

"The anticipated strong performance in May reflects the combination of strong underlying demand coupled with a quirk of the industry sales calendar, with the May sales month containing five weekends, compared with just four weekends last May," John Humphrey, senior vice president of the global automotive practice at J.D. Power, said in a statement.

U.S. new-car sales in April rose 8 percent, while the annual selling rate finished at 16.04 million vehicles.

LMC still expects sales for the full year will finish at 16.1 million vehicles, which would be up more than 3 percent from last year.

"Three consecutive months of solid growth has returned the market to the expected trend level on a year-to-date basis," said Jeff Schuster, senior vice president of forecasting at LMC. "As we move toward the second half of the year, the selling rates are expected to continue improving, but the growth rates will begin to flatten out, increasing competitive pressures for all brands.

The industry's sales for May are scheduled to be reported on June 3.

(Reporting by Ben Klayman in Detroit; Editing by Peter Galloway)