U.S. light-vehicle sales slipped 0.5 percent in May. Discounts grew and truck demand stayed strong, but the industry was prepared to limp from one selling season to another.
The seasonally adjusted annualized rate of sales fell to 16.7 million, down from 17.2 million in May 2016. Analysts blamed weaker fleet volume across the industry. A Bloomberg survey of 11 analysts in late May had put the average estimate at 16.8 million.
May marked the third straight month the SAAR came in below 17 million, after six months above that threshold. Last year’s sales of 17.54 million set a record.
Lack of consumer demand for cars remains an issue. This holds even with low gasoline prices, strong job growth, and easy financing.
Ford, Nissan, and Honda posted sales increases in May. GM, Toyota, FCA, and Hyundai-Kia declined, leaving the industry just short of its first monthly gain of the year.
Ford’s 2.3 percent advance, aided by fleets, marked its first increase since December. Nissan rose 3 percent after a spike in discounts. GM dropped 1.3 percent as it cut shipments to rental agencies. Toyota, FCA, and Hyundai-Kia are still waiting for their first advance of 2017.
Truck sales rose 6.2 percent in May, rebounding after an April dip. Car demand fell again, with volume down 10 percent. Subcompact demand slid 19 percent, while midsize car deliveries dropped 12 percent.
Analysts had forecast a slight increase in May sales, helped by one extra selling day. Incentives climbed as well. Edmunds said finance incentives rose 33 percent year over year. Lease offers increased 28 percent, and cash incentives rose 18 percent.
Nissan’s gain came from Infiniti, up 16 percent. Its namesake brand rose 1.9 percent. These results followed a 1.5 percent decline in April, Nissan’s only drop this year. ALG estimates Nissan’s average incentive rose 19 percent last month to $3,867.
Ford deliveries rose 2.3 percent overall. Volume at the Ford division climbed 2.2 percent, while Lincoln gained 4.9 percent. Retail sales slipped 0.8 percent, but fleet shipments jumped 8.4 percent. Daily rental deliveries surged 24 percent. Ford outsold GM by nearly 2,900 vehicles, its first lead since March 2016.
GM said May sales dropped 1.3 percent. Chevrolet fell 3.8 percent, and GMC slid 5.2 percent. Buick rose 29 percent, and Cadillac gained 9.2 percent. GM’s retail sales edged up to 191,388 vehicles. Fleet volume dropped 36 percent.
Toyota sales slipped 0.5 percent to 218,248. The Toyota division inched up 0.1 percent, while Lexus fell 4.8 percent. FCA deliveries dropped 0.9 percent. Jeep fell 15 percent, Fiat dropped 16 percent, and Chrysler slid 1.8 percent. Ram rose 18 percent, Dodge climbed 8.4 percent, and Alfa Romeo sold 919 vehicles compared with 44 a year earlier.
VW brand stretched its winning streak to seven months with a 4.3 percent gain. Subaru volume rose 12 percent. Mazda deliveries dropped 7.9 percent, while Mitsubishi sales edged up 4.5 percent.
Luxury brands also gained. Audi rose 2.5 percent, Porsche 5 percent, Jaguar 44 percent, Land Rover 0.9 percent, and Volvo 12 percent.
Even with economic growth, strong job numbers, and record-high equity markets, U.S. auto sales are down 2 percent for the year. Analysts say 2017 could mark the first annual decline since 2009, ending a seven-year streak of growth.
Incentive spending set a record in May. J.D. Power said it averaged $3,583 per vehicle, up $241 from a year earlier. Truck incentives rose $187 to $3,358. Car incentives jumped $344 to $3,942.
Inventories are also climbing. J.D. Power said average supply rose above 70 days in May, the first time since 2009. More than 27 percent of new vehicles sold in early May sat on dealer lots for over 90 days, up from 25 percent in 2016.
ALG estimates incentive spending averaged $3,435 in May, up 9.5 percent from last year. GM, Ford, FCA, and Volkswagen Group spent the most among major automakers. ALG cut its 2017 sales forecast to 17.2 million from 17.4 million.
Analysts add that deals are most generous on leftover 2016 models and some 2017 cars and light trucks.