With fewer weekends to move metal, most used- and new-vehicle sales projections from TrueCar, Edmunds.com and Kelley Blue Book consisted of varying degrees of softening against year-ago results.
However, TrueCar’s used-vehicle sales projection for May was a bit upbeat as analysts expect this month’s total sales — including franchised and independent dealership turns as well as private-party transactions — to reach 3,181,877 units. Should the industry hit that mark, the result would represent a 2-percent gain versus May of last year.
Meanwhile, the team at Edmunds.com thinks used-vehicle sales will reach a slightly higher figure — an estimated 3.2 million units for a seasonally adjusted annual rate of 38.5 million. That projected SAAR is the same as a year ago, but Edmunds.com indicated last May’s sales figure came in at 3.4 million so the unit sales forecast is slightly lower.
In its May projection, the Kelley Blue Book team mentioned a prediction that could be noteworthy to used-car managers. KBB suspects that General Motors could be sustain a notable new-model sales decline because of its rental reduction strategy.
“General Motors is expected to report one of the largest sales declines of all major manufacturers in May 2016,” Kelley Blue Book analyst Tim Fleming said.
“GM has been outspoken about its rental reduction strategy, which accounts for much of the drop in volume and will impact sales totals on the company's high rental units like the Chevrolet Cruze, Impala and Equinox,” Fleming continued. “GM is keeping the end-game in mind here. By reducing the volume of GM vehicles in rental fleets, the company will eventually see strengthened residual values.”
No matter what automakers and dealers might do to move used or new metal before the end of May, they’re all facing the situation of one less weekend — a factor multiple analysts noted as likely to impact sales results.
Kelley Blue Book said new-vehicle sales are expected to decrease 6 percent year-over-year to a total of 1.53 million units in May, resulting in an estimated 17.4 million SAAR.
“This month’s sales results are set to fall year-over-year with two fewer selling days combined with retail demand that is holding steady, but not growing,” Fleming said. “While this year may not bring the growth the industry has become accustomed to, it is important to remember that sales are still at record levels and economic factors point to continued strength in the near future.”
Over at TrueCar, analysts touched on how the calendar fell this month, too, putting its projection for total new vehicle sales, including fleet deliveries, at 1,569,538 units in May. That figure would mark a drop of 4 percent from a year ago, restrained by one less weekend compared with the same month in 2015.
“Memorial Day weekend kicks off the summer selling season and we see consistent strength in demand, particularly for crossover utility vehicles and pickups,” said Eric Lyman, TrueCar’s vice president of industry insights. “The industry is up against a tough comparison with May 2015 — with five weekends then versus four this year — but that doesn’t diminish the market’s underlying health.”
And at Edmunds.com, analysts expect that May new-vehicle sales would reach 1,537,436 units for an estimated SAAR of 17.5 million. The site’s projected sales figure would be a 2.3-percent increase from April but a 5.8 percent decrease from May of last year.
While sales appear to be slowing, Edmunds.com says that 2016 is still on track to break last year’s record of 17.47 million new-vehicle sales.
“It’s easy to look at May’s sales and conclude that the retail car market is losing steam, but it’s too soon to say for sure that auto sales are leveling off,” said Edmunds.com director of industry analysis Jessica Caldwell.
“As in previous years, the summer months will flush out more incentives from automakers and the urgency that shoppers show in responding to these incentives will give the industry a much better sense of how the market is trending,” Caldwell continued.
TrueCar reported that incentive spending by automakers averaged an estimated $3,034 per vehicle in May, up 7.1 percent from a year ago, but down 0.4 percent from April.
“Incentives moderated a bit this month while consumers stay focused on higher-margin products,” Lyman said. “Along with this May’s abbreviated selling period, automakers have to adapt to weaker demand for midsize and small cars as relatively cheap gas entices more consumers to upgrade to crossovers and pickups.”
Lyman also mentioned the Federal Open Market Committee left interest rates unchanged last month and overall U.S. economic conditions remain positive. He added that April’s unemployment rate held steady at 5.0 percent, the lowest for the month in eight years, and gasoline prices are still favorable for consumers, falling to a national average of $2.29 per gallon on May 24 from $2.738 a year earlier.