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Despite Earlier Concerns, May Car Sales Could be Best in Five Years.

Toyota, Honda, VW expected to deliver strong gains.

by on May.29, 2012

Japanese makers, in particular, appear to be having a very good month. Toyota, in particular, is recovering well from last year's production cuts.

With motorists reportedly flooding dealer showrooms over the long holiday weekend, May could turn out to be the best month since mid-2007 for new car sales – with Japanese automakers Toyota and Honda driving much of the upturn as they recover from last year’s devastating, earthquake-led production cuts., which tracks new car pricing, trends and forecasting, estimated new light vehicle sales in the U.S. — including fleet — should reach 1.401 million, up 32% from May 2011 and an 18.3% increase from April of this year.

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Exactly how strong a month May proves to be will depend on the final sales figures from the long Memorial Day holiday weekend.  But that is expected to offset some apparent weakness in the market earlier in the month.

CNW Marketing had reported a sharp jump in its so-called Jitters Index, a sign that consumers might be growing nervous about the vitality of the economy.  (Click Here for that story.) But things seem to have taken a turn for the better, reported CNW’s chief analyst Art Spinella, over the weekend.

“Floor traffic continues to soar,” Spinella said, referring to the number of potential buyers flooding into U.S. showrooms over the holiday weekend.  Even more significant, he noted that closing rates – the number of shoppers actually signing a deal – had soared over the weekend.

The May 2012 TrueCar forecast translates into a Seasonally Adjusted Annualized Rate, or SAAR, of 14.5 million new car sales, up from 11.7 million in May 2011 but essentially the same as April. The SAAR is currently running 1 million units ahead of the pace carmakers predicted at the start of the year.

That has led a number of analysts and automakers to up their forecast for the year – General Motors recently predicting 2012 could see the market grow to 14.5 million, a figure not seen since the industry began to collapse prior to the 2008 start of the Great Recession.

Retail sales are up 29.4% compared to May 2011 and up 21.1% from April, TrueCar estimated.

Fleet and rental sales are expected to make up 21% of total industry sales in May 2012. The industry manufacturer’s average incentive spending per unit will be approximately $2,392 in May, which
represents an increase of 4% from May 2011 and decrease of 2% from April.

“Pent-up demand continues to fuel auto sales at a steady and sustainable level in May,” said Jesse Toprak, TrueCar’s vice president of market intelligence.  “All major manufacturers will see double-digit growth this month,” Toprak said.

Toyota looks particularly strong as it recovers from natural disasters at a breakneck pace, Toprak added, as does Honda.  The two makers were hard hit by the March 2011 Japanese earthquake and tsunami – with their anticipated recovery delayed by flooding in Thailand last autumn.

Volkswagen is also showing signs of having a solid month, the German maker on a steady roll since launching the new Passat last year, the sedan being produced at VW’s new assembly plant in Chattanooga.

J.D. Power and Associates and Troy-based LMC Automotive also reported that the new-vehicle retail sales pace in May remains strong, consistent with the tempo set early this year. The monthly sales forecast developed by J.D. Power and LMC projected May new-vehicle retail sales will reach 1.087 million units and are pointing toward a double-digit sales increase for May.

“This is the largest year-over-year gain since February 2011, when sales increased 27%, compared with February 2010,” said John Humphrey, senior vice president of global automotive operations at J.D.
Power and Associates. also said light vehicle sales are expected to continue at a healthy clip in May, estimating the SAAR will hit 14.4 million units.

That would work out to a 17.5% increase from April 2012 and a 31.1% increase from May 2011, according to Edmunds.

“Almost halfway through the year, the auto industry keeps chugging along toward a mid-14 million unit sales pace,” said Jessica Caldwell, Edmunds senior analyst.

Paul A. Eisenstein contributed to this report.

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One Response to “Despite Earlier Concerns, May Car Sales Could be Best in Five Years.”

  1. ManmohanManu says:

    Automobile retail is one of the major contributor to the US economy . Readers may also be interested in this Retail White Paper that describes the current trends and challenges in the retail sector.