New-vehicle sales to remain flat year-over-year in May, KBB reports

(May 25, 2017) IRVINE, Calif. — New-vehicle sales are expected to remain flat year-over-year at a total of 1.53 million units in May, resulting in an estimated 16.7 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book

"We could see a positive month for the industry for the first time this year in May, but Kelley Blue Book expects totals to finish about even year-over-year, despite one extra selling day in 2017," said Tim Fleming, analyst for Kelley Blue Book. 

"Retail numbers for May are expected to finish strong, however they continue to be supported by considerable incentives and lease subvention.  In recent months, leasing appears to be reaching its peak, which is expected, given declining residual values and which is contributing to this year's slowing sales."

After a record year of sales in 2016 and seven consecutive year-over-year sales increases, Kelley Blue Book's forecast for 2017 calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1 to 4 percent decrease from last year.

Key highlights for estimated May sales forecast:

    • In May, new light-vehicle sales, including fleet, are expected to hit 1,525,000 units, flat compared to May 2016 and up 7 percent from April 2017.

    • The seasonally adjusted annual rate (SAAR) for May 2017 is estimated to be 16.7 million, down from 17.1 million in May 2016 and down slightly from 16.8 million in April 2017.

   •  Retail sales are expected to account for 80.5 percent of volume in May, slightly up from 78.9 percent in May 2016.

General Motors is poised to gain market share in May with growth driven by its SUVs, specifically the new GMC Acadia and Buick Envision.  In fact, GM could see its SUV sales volume increase by more than 15 percent, which would offset any potential declines from its car and pickup truck models.

Hyundai-Kia could see one of the largest declines in May, with volume expected to drop more than 4 percent year-over-year.  The company still faces challenges regarding the shifting demand toward SUVs, and compared to the other major manufacturers, Hyundai-Kia has the highest sales mix of cars at 69 percent, while the industry average sits at 37 percent.

Yet again, there is a clear divide in the market between cars and light trucks, and in May, Kelley Blue book anticipates the sales mix of cars to reach 38 percent, down 3 percent year-over-year.  While SUV segments continue to see the most significant gains, full-size trucks are expected to increase market share by 0.5 percent in May, though deeper discounts and incentives are partially responsible for the growth.

"Consumers are continuing to defect from the mid-size car segment at a rapid pace," said Fleming.  "Most commonly, they are turning to the compact SUV/crossover segment.  As such, Kelley Blue Book expects mid-size cars to lose more than one point of share in May, while compact SUVs are expected to pick up nearly one point of share."