U.S. auto sales in May surprised, coming in stronger than forecast and driven in part by fleet sales, healthy incentives and strong consumer confidence. Market volatility has been the norm so far in 2019, and in May we saw more of that with the SAAR running well above the consensus outlook. Honda was below forecast, but FCA, Nissan, Subaru and Toyota all posted strong numbers. The average transaction price for a new vehicle was up as well, nearly 4% higher than prior-year levels according to our colleagues at Kelley Blue Book. Read those details in a press release distributed earlier today.
General Motors and Ford do not officially post monthly numbers. Cox Automotive, however, is estimating that both companies delivered monthly results that were lower than year-ago levels due to a major reduction in car sales, as both companies discontinue models in major car segments.
Please find below commentary and notes from the Industry Insights team at Cox Automotive.
From Charlie Chesbrough, senior economist, Cox Automotive
May auto sales are coming in far better than the consensus view expected and above year-ago levels, a complete reversal from a slow April. Accurate forecasts are proving difficult in 2019, as the market is experiencing huge volatility from month to month. The sales pace in April was 16.4 million. May could be near 17.4 million, although that number was likely driven more by fleet than retail demand. Still, there’s no denying many of the economic indicators we follow support strong sales: consumer confidence is high; interest rates, although higher than year-ago levels, have mostly stabilized; employment is near record lows; the stock market, while volatile, is up year to date. With those positive indicators in place and new tax laws that benefit fleet buyers, a stronger-than-expected May should not be a total surprise.
From Zo Rahim, manager, economics and industry insights, Cox Automotive
The strong May performance was likely less about retail and more about fleet, which has been the case for much of 2019. Retail sales remain weak; there is little evidence that demand for new vehicles is strengthening. To maintain sales, auto companies are pulling the fleet lever, as FCA clearly did in May. Of the 218,702 total FCA sales last month, 31% were fleet (67,798). A year ago, fleet sales for FCA were 46,509, which means FCA fleet sales jumped 46% in May 2019.
From Brad Korner, general manager, Cox Automotive Rates and Incentives
Incentives levels, as they often do, have been tracking upward through the spring. In May, the level of incentives offered by the automakers was at its highest point in 2019, but below the level we saw in May 2018. Both Ram and Chevrolet greatly increased incentives on full-size pickups in May and added 0% financing deals for up to 72 months on 2109 model year trucks, which likely helped drive traffic. Ford got more aggressive on incentives as well, indicating the pickup truck incentive wars are raging on as more models – including the Ford Ranger and Jeep Gladiator – enter the market.
Join Us: Cox Automotive Mid-Year Review Conference Call
Cox Automotive will be hosting our annual Mid-Year Review on Wednesday, June 26, beginning at 10 a.m. EDT. During that program, our team will discuss key economic indicators driving the auto market, review the June and six-month forecast, and offer analysis of new- and used-vehicle sales for first half of 2019. RSVP here.
If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.