May is looking to be a good month for auto dealers as sales are projected to increase from last month as well a year ago.
S&P Global Mobility projects new U.S. light vehicle sales volume in May to reach 1.4 million units—up approximately 7 percent from the April and 3 percent from May 2023.
The estimated May sales total would translate to a sales pace of 15.6 million units seasonally adjusted annual rate (SAAR). When viewed on a three-month moving average basis, the monthly SAAR metric has been trending sideways since the third quarter 2023, according to S&P officials.
U.S. Economy Headwinds
Chris Hopson, principal analyst at S&P Global Mobility, is not surprised at this trend due to the current economic conditions American consumers are facing.
“Given the auto consumer affordability headwinds of vehicle prices remaining high, mixed with high interest rates, there’s been limited momentum in regard to the pace of auto sales levels over the past three quarters,” said Hopson in a press statement.
According to S&P forecasts, the total number of light vehicles purchased is expected to be 1.40 million, up from 1.31 million in April and 1.36 million in May 2023. Light trucks account for 12.6 million purchases, down from 12.7 million a month earlier but up from the 12.3 million at the same time last year.
For passenger cars, the 3.0 million sold is unchanged from April and down from the 3.2 million last May.
Production, Inventory Intersection
Light vehicle production volume is at pace that anticipates sustained growth for inventories and incentives moving through the rest of 2024. And like sales, growth levels for inventories are settling also.
According to Matt Trommer, associate director, S&P Global Mobility, an analysis of April retail advertised inventory data in the U.S. finds that inventory is still on the rise, with electric vehicle (EV) inventory growing faster than the overall industry.
“Available retail advertised inventory at the end of April rose to 2.77 million vehicles, up 1.3 percent compared to March and 57 pecent over last April,” said Trommer. “This is the 11th consecutive month of increases—[and] 22 of the last 24 months have grown vs. the prior month—but the rate of increase is the lowest since July 2023.”
Electric Vehicle Market
As for the EV market, May share is expected to reach 7.6 precent, relatively unchanged from April.
S&P officials are projecting the sector to grow over the next several, citing the expansion of offerings by automakers. New models to be offered over the next few months include the Chevrolet Equinox EV, Honda Prologue and Fiat 500e, followed by new the Jeep Wagoneer S and Volkswagen ID. Buzz slated for release in the second half of 2024.
Overall, S&P’s Hopson warns current projections could change downward.
“While incentives and inventory levels—two potential forces to combat some of the new vehicle affordability concerns–have continued to develop over the same time frame, a potentially constrained consumer continues to dictate monthly sales levels, with downside risks to rest of year sales volumes beginning to emerge,” he said.
