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SAAR Returns to 17M on Stronger May Sales

U.S. dealers sold slightly fewer new vehicles last month than in May of 2018, but the annual forecast increased to 17.4 million units — thanks in no small part to strong fleet sales.

Tariq Kamal
Tariq KamalFormer Associate Publisher
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June 4, 2019
SAAR Returns to 17M on Stronger May Sales

U.S. dealers sold 35,702 new vehicles bearing the Volkswagen marque last month, a 14.4% improvement from May of 2018. Sales of the Atlas SUV (above) have grown 24% year-to-date.

Photo courtesy Volkswagen AG

3 min to read


(Bobit) — U.S. sales of new light vehicles registered a year-over-year decline for the fifth straight month in May, but strong fleet sales helped contain the damage, helping the seasonally adjusted annualized rate grow to 17.4 million, according to factory reports and estimates gathered by Automotive News.

Sales of all new vehicles totaled 1,587,335 in May, 0.3% fewer than the same month a year ago. But fleet sales are up 7% year-to-date, slowing the overall rate of decline to 2.4% from 3.2% at the end of April. The SAAR rose accordingly, up 5.2% month-over-month and exceeding the 17 million-unit mark after slipping below it to start the second quarter.

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Cox Automotive’s senior economist, Charlie Chesbrough, said “huge” month-to-month swings have made accurate forecasts difficult so far this year.

“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,” Chesbrough said. “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.”

Results were mixed among the Detroit 3. Ford (-4.1%) and General Motors (-1.2%) both declined while Fiat Chrysler Automobiles eked out a 2% gain fueled primarily by a 29.4% increase at its Ram division. Fiat (-28.9%), Chrysler (-26%), and Jeep (-7.2%) all declined.

Mini (-33.2%), Mitsubishi (-21.5%), Mazda (-16%), and Jaguar (-14.6%) were among the manufacturers reporting lower year-over-year sales; Mitsubishi was up 37% in March before declining 13% in April.

Genesis led all major manufacturers with a 115% improvement from May 2018. Tesla is believed to have grown sales by 16.9%; Volkswagen reported a 14.4% gain.

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Edmunds reports average interest rates fell to 6.1% last month — a new low for 2019 — undoubtedly helped by zero-percent Memorial Day weekend offers. J.D. Power reported average incentive spending grew 0.7% to $3,722. Kelley Blue Book analysts say average transaction prices fell 0.6% month-over-month but were 3.7% higher than in May of 2018.

“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,” said Brad Korner, general manager, Cox Automotive Rates and Incentives. “Both Chevrolet and Ram greatly increased incentives on full-size pickups in May and added zero percent financing deals for up to 72 months on 2019 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.”

To read the full Automotive News report, click here.

Originally posted on Auto Dealer Today

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