May Flowers: Cox Predicts 3% Increase in New-Car Sales
May 29, 2018
A worker at Volkswagen’s Chattanooga, Tenn., plant installs components on an Atlas SUV. Cox Automotive analysts predict the German automaker’s U.S. new-vehicle sales will enjoy an industry-best 14.8% year-over-year increase in May. Photo courtesy Volkswagen of America Inc.
ATLANTA — U.S. new-vehicle sales in May 2018 are expected to increase 3.1% compared to May 2017, according to a forecast released today by Cox Automotive. The seasonally adjusted annual rate (SAAR), projected at 16.6 million for this month, is expected to fall to its lowest level since August 2017. The forecast 16.6 million SAAR is down slightly from the 16.7 million level in May 2017, and down from the 17.1 million pace the market has been averaging in 2018.
“This month’s sales volume is expected to rise over last year, but May 2018 has one additional selling day,” said Charles Chesbrough, senior economist at Cox Automotive. “Sales volume is expected to reach 1.56 million, an increase of nearly 50,000 units from this time last year and up 15.6% from April 2018. This selling rate, however, would mark the first month below 17 million SAAR since last August, when Hurricane Harvey disrupted the market.”
May is a critical month for the auto industry, with Memorial Day weekend deals often driving robust sales. During the last five years, May has averaged the highest volume over any other month, driven in part by aggressive holiday incentives and promotions. This year, Memorial Day is earlier than usual, which will afford automotive dealers and buyers more time to take advantage of special offers. The all-time May sales record was in 2015 when 1.63 million units were sold. However, the record on a seasonally adjusted basis occurred back in 2004, when SAAR hit 17.8 million.
Key highlights for May 2018 include:
- New light-vehicle sales, including fleet, are forecast to reach 1,560,000 units, up 3.1% (or 47,000 units) compared to May 2017 and up more than 15% from last month.
- The SAAR in May 2018 is estimated to be 16.6 million, down slightly from last year’s 16.7 million pace, down from April’s 17.1 million level, and well below the 17.1 million average for 2018.
- A record SAAR in May is possible, but with the seasonal adjustments a huge Memorial Day Weekend would be required to reach a volume of 100,000 above current forecasts.
Cox Automotive expects most OEMs to report higher year-over-year sales in May 2018. With one additional selling day, increases are predicted even in a flat market. The Jeep and Volkswagen brands are expected to continue to perform well. However, Nissan, which had a significant decline last month, is expected to post lower sales again, as they pull back on fleet and incentives.
As Autotrader Executive Analyst Michelle Krebs noted, “the entire industry will be watching Nissan this month after the surprise in April. Nissan has been making strategic decisions about its sales approach, working to reduce incentive spend and fleet sales, focusing more on quality sales and less on absolute market share.”