US vehicle sales rise 11.3% y/y in May, SAAR reaches 16.77 mil.

Vehicle sales in the United States rose 11.3% year on year (y/y) and 15.4% month on month (m/m) in May, following several disappointing months, and delivered the highest seasonally adjusted annual rate (SAAR) since February 2007.

Detroit automakers

General Motors (GM) delivered 284,694 cars and trucks in May, up 12.6% overall and 9.7% for the year to date (ytd). GM reported a 10% increase in retail sales as well as a 21% increase in fleet sales. Average transaction prices in May were flat with those in April, and were up USD2,700 for the year, while incentive spending declined 0.5% for the year, to 10.4%. Buick showed a gain of 11.0% (a smaller gain than April’s 12.0% or March’s 13.4%), with increases for the Encore (112.8%, going against an early sales month) and the Regal (up 49.1% to 2,396 units). The LaCrosse saw sales slip 2.6%, but at 4,681 sedans sold it still outsold the Encore's 4,589 units and retained its top-seller status in the Buick range. Verano sales slipped 8.2% to 3,816 units, while Enclave demand contracted 13.6% to 4,589 units. For the year to date, Buick is up 11.2%. Cadillac continued to gain sales growth, though gaining the least of GM's brands at 6.4%; sales were still down 2.3% ytd. The Escalade (up 61.1%, 1,664 units) and Escalade ESV (up 21.7%, 846 units) both showed good responses to the new model, despite an early airbag recall. The SRX remains the brand’s highest-volume product, gaining 27.2% to 4,762 units. The CTS saw demand up 18.2% to 2,905 units, while the ATS continues to struggle and declined 23.1% - for the year, the brand’s smallest sedan is down 20.2%. Chevrolet saw sales increase 14.2% to 205,010 units; for the year to date, the brand reversed its decline and sales showed a 2.2% increase. The highest-volume car continues to be the Cruze, with the 32,393 units sold being up 40.5% y/y. Malibu sold 19,288 units, a 2.1% gain and similar to last month's sales. The Impala saw a 23.1% gain in demand and 19,288 units sold. The Camaro (30.4%), Corvette (268% compared with a changeover year), Spark (100%), and Traverse (23.5%) all picked up double-digit gains, though the Sonic fell back 7.8%. Largely, these results mirror those earlier in the year, with the same winners and losers. On the truck side, the Silverado sold 46,648 units for a 7.8% y/y gain. The new Suburban saw sales up 14.1% to 5,423 units, a smaller increase but higher volume compared with April, and Tahoe sales were slightly down (0.2%) to 9,229 units. Chevrolet’s crossover sport utility vehicles (SUVs) reported mixed results; Equinox sales fell back 1.0%, while Traverse sales picked up 23.5%; the fleet-only Captiva Sport saw sales gain 30.4%. GMC gained 8.3% to 45,039 units and was up 4.1% for the year. The Sierra picked up 14.1% to sell 18,326 units and Yukon 143.1% to 4,409 units, though the Yukon XL fell back 37.5% to 3,164 units.

Ford also reported a more modest increase in May, up 3.0% to 254,084 units for the month; for the year to date, sales were down 0.9% to 1.047 million units. Retail sales, where Ford has been prioritising its sales efforts, were up 6%. The Ford brand's sales fell by 2.5%, while Lincoln picked up by 21.1%, to 8,845 units, in May. For the full year, Ford was down 1.6%, while the Lincoln brand was up 20.8%. The F-Series saw a rare sales decline, falling 4.3% y/y to 68,520 units; for the full year, the truck is still up 1.9%, and the model still held its status as the best-selling vehicle in the country. The truck segment represented 11.5% of the overall industry versus 12% in May 2013. Ford reported average full-size truck transaction prices were up USD3,000 in May, more than the previous month, indicating the segment is "stronger than sales results would suggest". In terms of monthly sales, Ford indicated the decline was planned, as the company manages inventory ahead of changeover to 2015. Fusion is still Ford’s second-best-selling product, and picked up 14.6% for its best-ever month of 33,881 units. The gain helped reverse earlier declines, and the sedan is up 0.8% ytd. Escape sales also returned a best-ever month, and reversed April’s decline for a demand increase of 9.5% compared with a year ago, to 31,896 units; the SUV is still off 0.1% ytd. Ford reports that the small-car market is still under pressure from small SUVs, with the Focus down 12.9% to 23,683 units. As Ford continues to reduce daily rental fleet, it continues to impacted Focus. The C-MAX continues to see significant declines on stable gas prices, though its 23.7% drop in May was less steep than in April; the vehicle is down 38.2% for the year. Lincoln brand picked up 21.1% y/y in May, and us up 20.9% for the first five months of the year. The MKZ fell set a new monthly record of 3,714 units, up 6.4%, while the first 677 MKC SUVs were delivered in May. The MKX performed well, with a 31.2% gain to 2,403 units.

Chrysler continues to see sales increase, reporting its 50th consecutive month of y/y sales gains, with overall demand growing well ahead of market, at 16.7%, to 194,421 units sold in May. The Ram pickup continues to be the company’s best-selling vehicle in the US, and sales increased 17.2%, to 37,131 units; YTD, the pickup’s increase is 21.4%, with sales of 170,711 units. The Ram Cargo Van is being phased out by the ProMaster Van, and the ProMaster saw May sales of 1,033, compared with the Cargo Van’s 768 units. The Fiat brand story remains the same as last month: The brand reported a gain in sales, with the 500L’s 1,434 units sold making up for the continuing decline in 500 sales, down to 3,337 units in May. The brand is up 17.7%, while sales of the 500 have declined by the same amount. Year to date, the brand is up 16.6%. Chrysler brand sales fell 22.2% in May, all-new 2015 200 is not in full supply and the selldown of the prior car continues. The 300 fell 7.1%, or 358 units lower than last year, and Town & Country was up 37.2%. The minivan, with 14,799 units sold, accounted for more than half the 22,592 Chrysler products sold in May. Jeep sold more of every model this May than last, excepting the defunct Liberty, to register the best sales month ever for the brand. Given the gap between Liberty’s end of production and the delayed Cherokee start, Jeep is poised to show strong gains across most of this year, with May reflecting a 58.0% gain to 70,203 units sold. Sales of the Cherokee reached 15,992 units, nearly as many as the Compass and Patriot combined. Grand Cherokee saw a 12.7% gain, returning to double digit gains of earlier this year. The aforementioned Compass and Patriot were up 64.3% and 24.2%, respectively, and Wrangler up 18.2%. Dodge brand saw a small increase of 2.7$, but declines in earlier months mean the brand is still down 4.5% ytd. Throughout the year, Dodge sales are likely to struggle, as the Avenger fades away without replacement. Avenger sales tracked 6,055 units in May. The Dart picked up 16.1% sales in May, to 8,644 units, but is still down 20.2% for the year. The Challenger (+4%), Journey (+33%), Caravan (+10%) and Durango (+28%) all reported sales gains, while the Charger was flat.

Japanese automakers

Toyota saw a 17.0% gain in May, well ahead of the market, to 243,236 units. At the Toyota division, demand increased 16.5% while at Lexus sales were up 21.1%. Toyota brand dealers, sold more cars (128,109) than trucks and SUVs (88,206). As typical, May sales at the Toyota Division were dominated by the Camry and Corolla; their combined sales of 86,195 units made up 39.8% of Toyota brand sales, compared with 38.0% in April. Camry and Corolla were up 26.4% and 30.8% respectively. Prius (up 13.9%) and Avalon (up 2.0%) reversed declines, while Yaris fell 9.1%. SUVs gained 15.3% overall. The RAV4 was up 12.9%, Highlander 8.5%, and 4Runner 69.9%. Sequoia fell 11.1% and Land Cruiser down 2.2%. The aging Venza fell 1.0%--less than April’s 7.4% decline. Trucks were mixed, as Tundra picked up 14.5%, while the Tacoma dropped 5.8%. Scion continues to struggle, though the dropping 6.1% in May. However, the Scion tC (up 21.9%) and xD (up 2.0%) showed a gain. The sporty FR-S declined 14.1%. The Lexus y/y gain in May of 21.1% brought Lexus sales to 26,921 units for the month; Lexus displayed a YTD gain, up 18.7%, well ahead of the market. Of that, cars continue to outsell the SUVs and accounted for a steady 56.2% of the brand’s sales. The newer IS, being compared with a selldown month, showed another triple-digit gain; the higher-volume ES gained 10.7% to sell 6,523 units. The CT, which has shown high volatility, picked up 8.6% to sell 1,762 units. The GS fell back 13.0%. Lexus’ truck nameplates picked up 20.2%, to 11,786 units. The GX gained 162.8%--to 1,958 units—while the higher-volume RX saw demand increase by 8.7%.

American Honda sales of 152,603 reflected a gain of 9.0% y/y in May, though ytd sales returned down 0.5%. the Honda Division saw a 9.8% gain (137,928 units), while the much smaller Acura Division sales increased 2.2% (14,675 units). Honda’s best-selling vehicle remains the Accord, up 19.3% to 39,637 units, second to Camry’s 49,584 units. The CR-V (32,430) was not able to duplicate outselling the Civic (36,089). CR-V saw demand grow by 18.8% compared with Civic’s 19.3% gain. Odyssey sales, at 12,915 units, fell back by 9.0% in May, while Toyota’ Sienna and both Chrysler Group minivans saw gains. Honda’s hybrids also saw declines, though total HEV sales reached only 1,945 units in May, 1.4% of Honda Division sales, compared with 1.6% in April. Acura sales increased 2.2%, to 14,675 units, in May. The luxury brand’s sales continue to be dominated by their MDX and RDX, which accounted for 70.1% of sales. MDX sales reflected a 115% increase, to 5,997 units, while the RDX slipped back 12.8% to 4,299 units. In the car lineup, the RLX picked up 18.7% to 324 units, while the others slipped back. Acura’s TL is being by the TLX in fall of this year, which may cause Acura’s car lineup to struggle throughout 2014.

Demand for Nissan and Infiniti picked up 17.8% in May to sell 125,558 vehicles. At Nissan, gains were reported from the Leaf (45.8%, 3,117 units) and Juke (33.4%, 3,825 units). Altima saw a 12.9% gain, to 36,053 units, while Sentra gained 75.4% sales, to 21,932 units. In terms of Nissan trucks and SUVs, the Rogue was up 8.0% to 18,722 units. The Titan fell 16.8%, selling only 1,166 units; Frontier gained 1.4% to 6,662 units. Xterra (down 7.4%) and Pathfinder (down 15.1%) both returned a sales decline. The NV full-size van saw 51.9% gain to 1,475 units, while the smaller NV200 reported a strong 1,203 sales. Murano gained 14.5%, while the Quest dropped 11.6%. Armada lost 28.2% to 1,104 units. Infiniti gained 31.4% to 10,376 units. The Q50 (2,938 units) and QX60 (2,736) continue to be the best-selling products. The QX60’s volume reflects a 7.3% decline. The Armada’s twin, QX80, showed a 4.5% gain—to 980 units sold.

Mazda picked up 22.5% sales in May, for a total of 29,731 units and the brand’s best sales month in 18 years. The Mazda3 (10,682 units, up 19.6%) outsold the CX-5 (9,291 units, up 30.3%). Gains from the Mazda2 (up 63.6%) and Mazda6 (up 38.5%) enabled the car line to show a 24.2% increase for the month while the SUVs picked up 19.7%.

Subaru continues to demonstrate strong sales, though the y/y gain of 10.7% to 44,170 units in May is softer than the 21.7% gain April. The company’s YTD total is 196,641 units, up 18.9%. The Legacy saw a decline of 31.1% and the Outback dropped 5.1%, ahead of the arrival of the next generation. The Forester held out as the brand’s best-seller, with a 40.5% sales increase to 14,146 units. The Impreza and WRX combined sold 8,616 units in May, up 22.2%. Subaru sold 5,778 XV Crosstrek models, for a 9.1% increase.

Other automakers

Volkswagen Group sales in May 2014 fell 3.2% to 53,665 units. The struggling Volkswagen brand saw a y/y sales decline of 15.0%, selling 32,163 units in May 2014. Audi gained in April by 25.5%, to 16,601 units and 11.4% ytd to 67,482 units; while the low-volume A8, allroad and R8 saw sales declines, all other models picked up sales. Porsche picked up 17.3% for 4,609 units sold. Combined sales for Hyundai and affiliate Kia, which operate separately, recorded an 8.5 % increase for May 2014. Hyundai showed an increase of 3.7% and claimed its best month ever, while Kia gained 14.8% and also noted its best monthly US sales. Kia’s strongest seller remains the Optima (16,843 units), followed closely by the Soul (15,606 units), while Hyundai sales of Elantras (21,867 units) and Sonatas (20,404 units) remain strongest; including Santa Fe (10,638 units), this top three accounts for 74.6% of Hyundai’s sales.

Outlook and implications

May delivered the best month so far in 2014, with a pre-recessionary SAAR of 16.77 million units, the highest in seven years, and marks the third consecutive month of the SAAR being at or above 16.0 million units. After adjusting our forecast upwards at the close of March, to 16.03 million units up from 16.01 million, the full-year forecast is unchanged.

Industry incentive levels for April did not increase dramatically from the March reading, which left potential for heightened activity in the remainder of the spring selling months, as the inventory position realized little change, and pockets of excess vehicle stocks persists. Reflecting those conditions, incentive spend increased in May 2014, compared with May 2013, as well as rising compared with April 2014.

There were 27 selling days this May, one more than the year-ago period. On a unit volume level, 1.608 million light vehicles sold, a 11.3% jump from year-ago levels, helping to raise the year-to-date growth tally to 4.9%.

The monthly sales paces may be jumping around so far in 2014, but the monthly trends by manufacturer have remained generally consistent; Fiat-Chrysler (up 16.7%) and Nissan (up 17.3%) continue to lead the major volume automakers in y/y growth levels in May, with Toyota also increasing 17.0%. Subaru continued to see double-digit gains, though at a slower 10.7% pace as the Legacy and Outback are in a changeover period. Sales at GM were up 12.6%, also ahead of the market pace despite ongoing recall headlines. Ford continued to lag behind the overall industry pace every month this year and May brought no reprieve—though the Blue Oval saw an increase of 3.0% instead of a slight decline. Honda (up 9.0%), Hyundai-Kia (up 8.5%) and the VW Group (down 3.2%) continued to forfeit market share compared to last year.

Light truck sales, especially crossover utility vehicles (CUVs), continue to dominate the monthly results. Year-to-date, light truck sales are up nearly 314,000 units compared to last year, while passenger car sales are down 22,500 units—a lesser decline than April sales reflected. May sales reflected a 20.4% increase in small crossover utility vehicle sales, helping to support light truck sector growth of 13.3% for the month. Total passenger car sales were up year-over-year by 9.4% in May, compared with the more moderate 2.9% growth in April 2014 car sales. Car sales share increased to 49.3% in May compared with April’s 47.4%. In May 2013, however, car sales accounted for 50.2% of the market.

With the relatively consistent sales and production pace, month-end vehicle stocks for the overall industry declined compared with April 2014 levels. At the Detroit manufacturers, month-end US inventory for Ford was 631,068 units, down 25,000 units from last month while Fiat-Chrysler stocks were also down about 11,000 units to 494,482 units. Meanwhile a General Motors, inventory fell 10,000 units to a total light vehicle stock of 815,897 units.