May sales down 0.5 percent in fourth straight month of decline
U.S. auto sales dropped 0.5 percent in May in the industryês fourth straight month of falling sales. And that was with strong incentives and strong truck demand. Some of the decrease can be explained by a conscious effort to pull back on fleet sales, especially for General Motors. Ford Motor Co.ês 2.3 percent uptick in sales, partly due to fleet sales, enabled it to surpass GM in sales numbers for the first time since March 2016.
The seasonally adjusted annual sales rate (SAAR) was 16.7 million, down from 17.2 million a year ago. That decline is also related to the falloff in fleet sales. But economic fundamentals are strong.
The U.S. economy is operating at near full employment levels, wages are rising, interest rates and fuel prices remain low and consumer confidence remains high, said GM Chief Economist Mustafa Mohatarem.
Nationwide, light truck demand (including SUVs and crossovers) remains strong, making up 61.6 percent of vehicle sales in May. In the Washington region, light truck share is rising, but was still lower than U.S. share, at 56.7 percent in the first quarter (click here for the WANADA Area Report for first quarter numbers).
Nationally, compact SUVs are the most popular segment, and grew two percent from a year ago, said Kelly Blue Book analyst Tim Fleming. There are signs, however, of discounts in SUV segments that are growing quickly, including subcompact and luxury SUVs, which are likely helping to fuel those segmentsêdouble-digit sales growth this year.
Inventory levels remain high, with vehicles sitting on dealer lots more than 70 days on average, according to J.D. Power. Automotive Lease Guide analyst Eric Lyman told the Detroit News that dealers would likely continue to offer incentives to keep cars moving.
Transaction prices continue to grow, with an average of $33,261 in May according to Kelly Blue Book. The 2.6 percent increase from May 2016 can be explained partly by the rising share of trucks.Download Bulletin PDF