P&A Providers & Administrators
MenuMENU
SearchSEARCH

May Auto Sales See 'Dismal' Beginning

May 20, 2011
4 min to read


Car and truck sales picked up speed in the first four months of the year on rising consumer confidence, but they appear this month to be losing momentum.


Auto experts had expected a lull in May because of shortages of some of the most popular Japanese models, but they're watching to see if there's more to the slowdown than a dearth of supplies — perhaps some backsliding in demand, reported The Detroit News.

Ad Loading...


Forecasting firm J.D. Power and Associates said several factors are contributing to a "dismal" start in May auto sales.


"The biggest drivers are a pullback in incentives as well as lower availability of vehicles," said Jeff Schuster, executive director of global forecasting at J.D. Power. "Those two are contributing the most."


But gas prices nearing record highs also are weighing on the market, prompting some consumers to delay purchases, he said.


Based on sales in the first 11 days of May, J.D. Power estimates a monthly total of 1.07 million cars and light trucks — up 6 percent from weak prior-year levels, but down sharply from April.


It estimates this month's selling rate at 11.9 million light vehicles after three consecutive months of sales exceeding 13 million units on an annualized basis.

Ad Loading...


Over the past three months, automakers had seized the opportunity to scale back on profit-eroding incentives, but Schuster expects them to start offering bigger discounts, particularly as the Memorial Day weekend approaches.


George Pipas, Ford Motor Co.'s market analyst, was reluctant to read much into the early May results.


With many Japanese models in short supply, "most observers expected the sales pace would fall off in May and June," he said.


"But it's too early to determine whether there's something else out there besides the limited availability of models in the marketplace," Pipas said.


High gas prices have an effect on the market, prompting consumers to buy smaller or more fuel-efficient vehicles.

Ad Loading...


As in 2008, when fuel prices hit record highs, demand for big pickups is down.


They're sitting on dealer lots for more than three months, on average, while the days' supply for small cars in the U.S. market has fallen to 36 days.


There's a 10-day supply of Toyota Prius hybrids, and Honda Motor Co. warned U.S. dealers this month that supplies of the new Civic compact would be "severely restricted" and the Civic hybrid might not be available until later this year.


Japanese brands are experiencing more shortages this month than in April from a devastating March earthquake that halted most vehicle output in Japan for more than a month. Dealers in California complain of severe shortages.


But Ivan Drury, an analyst at auto research firm Edmunds.com, says the weakness in sales may be due more to a recent pullback in incentives — which translates into higher car prices — than the shortage of models. Except for the Prius, he said, there aren't that many models that are unavailable.

Ad Loading...


Toyota Motor Corp., after recently announcing that it expected to restore production faster than initially thought, is bringing back some incentives. It is offering low-interest and attractive lease deals on a variety of models, including the Toyota Camry and Corolla sedans and Highlander SUV.


But while the incentives became available on May 12, showroom traffic in this region remains slow, said Bob Page of Page Toyota in Southfield.


High gas prices have prompted shoppers to defer purchases, he believes — and that's what he hears from dealers with other brands.


"It's not just Toyota. Dealers are all seeing business in May that's fairly soft," Page said.


"People are shocked at $50, $60 and $80 (gas) refills. I think they're really feeling it."

Ad Loading...


But they'll have to come back into the market at some point, consulting firm A.T. Kearney said this week. It said the average age of vehicles on U.S. roads is now 10.4 years, resulting in huge pent-up demand that will help lift auto sales to 13.2 million cars and light trucks from 11.6 million last year. It sees sales recovering to prerecession levels of about 16 million vehicles by 2013.

More Industry

Kia Niro SUV in gold color parked outdoors
Industryby Hannah MitchellSeptember 1, 2026

Kia Closes Out Summer With a Bang

Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.

Read More →
Outside of Auto Park Ford dealership
Industryby Lauren LawrenceSeptember 1, 2026

Indiana Dealership Changes Hands

A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.

Read More →
Three men standing in front of two classic cars handing off gift.
Industryby Hannah MitchellAugust 25, 2026

Texas Dealership No Longer in the Family

The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.

Read More →
Ad Loading...
Outside of modern car dealership “Genesis of San Bruno
Industryby Lauren LawrenceAugust 25, 2026

Genesis Grows California Presence

The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.

Read More →
Red Honda Civic hybrid sedan on two lane road with green hills in background
Industryby Hannah MitchellAugust 21, 2026

August Auto Sales a Mixed Bag

An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.

Read More →
EV charger inserted into dark-colored car port
Industryby Hannah MitchellAugust 18, 2026

EV Market Humming Along

July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.

Read More →
Ad Loading...
car in background with hand giving a thumbs up in front
Industryby Lauren LawrenceAugust 14, 2026

Auto Loan Delinquency Rates Stabilize

Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.

Read More →
blue sky, yellow and orange rollercoaster with riders going up an incline
Industryby Lauren LawrenceAugust 12, 2026

EV Sales Recover in Q2

The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.

Read More →
Photo of blue Toyota Prius parked next to body of water with city skyline in background
Industryby Hannah MitchellAugust 5, 2026

The Cheapest Hybrids to Fuel

The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.

Read More →
Ad Loading...
white SUV parked in front of a body of water with a gray sky background
Industryby Lauren LawrenceAugust 5, 2026

Hybrids and SUVs Gaining Ground

The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.

Read More →