(May 21, 2010) After a somewhat shaky beginning, May retail new-vehicle sales are expected to benefit from a Memorial Day boost, and end the month with some strength, according to the latest forecast from J.D. Power and Associates.

May retail deliveries are predicted to reach 874,000 units, which is equal to a seasonally adjusted annualized rate (SAAR) of 9.2 million units, based on Power Information Network (PIN) retail transaction data and analysis by J.D. Power’s Automotive Forecasting department. Although May’s retail selling rate is expected to be lower than April’s 9.6 million-unit selling rate, retail sales in May 2010 are projected to increase 11% from May 2009.

“Compared with April, incentives this month are flat at $2,800, which is contributing to the slower sales pace,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “However, with the unofficial start of summer approaching, consumers are more inclined to consider purchasing a new vehicle, and it’s likely that Memorial Day sales incentives will generate an even stronger close for May.”

In its latest forecast, J.D. Power projects that total U.S. light-vehicle sales (retail and fleet) in May will come in at more than 1.079 million units—an increase of 17% from 1 year ago. May fleet sales are anticipated to increase, which will make up for the softer retail environment and push the total SAAR for the month to 11.3 million units, up from April’s selling rate of 11.2 million units and significantly ahead of the 9.8 million-unit pace in May 2009.

“Positive first-quarter GDP growth and favorable employment numbers suggest that the economy is performing slightly ahead of expectations,” said Schuster, noting, “In addition, robust product activity is expected to drive consumers into showrooms, and fleet volume is being replenished from the low levels of 2009. As a result, J.D. Power is increasing its 2010 sales forecast slightly to 11.8 million units (from 11.7 million units) for total sales and to 9.7 million units (from 9.6 million units) for retail sales.”