New Car Sales Pace Slowing Down

Retail new car sales in the month of May are expected to reach 1.24 million units in the United States, a 1% year-over-year increase. If that is going to happen, though, the Memorial Day weekend has to be a good one for automakers and car dealers.

Industry researchers at J.D. Power and LMC Automotive reported on Thursday that retail sales through the first five months of 2016 are projected to total 5.6 million vehicles, just 0.4% higher than in the same period last year. At that pace, new car sales in the United States will total 14.3 million for the year, a year-over-year increase of 1%.

J.D. Power’s Deirdre Borrego said:

The Memorial Day weekend is one of the busiest car-buying periods of the year, and we expect it to account for 19% of the month’s retail sales. While month-to-date sales indicate we will see a slight increase compared with May 2015, a key variable is the extent to which manufacturers launch holiday incentive programs. Depending on the value and availability of those programs, there is potential for May sales to exceed expectations.

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The seasonally adjusted annual rate (SAAR) for retail sales in May currently stands at 14.1 million units, down from 14.4 million last year. Total light vehicle sales (retail plus fleet sales) are forecast at 1.54 million for May. Fleet sales are forecast to rise 8.4% year over year to 298,000.

LMC Automotive’s Jeff Schuster said:

Vehicle-sales growth appears to be flattening out. While this is driven by an array of variables, including slow economic growth and stock market volatility, a pattern is emerging sooner than anticipated. While we do not anticipate a retraction in volume over the next 12-18 months, strong year-over-year growth will be difficult to come by.

Automakers are scheduled to report May sales on Wednesday, June 3.