US light-vehicle sales in May deliver highest SAAR of 17.7 mil. units since July 2005

May's US light-vehicle sales were strong, at a seasonally adjusted annual rate (SAAR) of 17.7 million units, up from 16.73 million units in May 2014 and 16.50 million units in April 2015. May's sales were up 1.6% year on year (y/y), while in the year to date (ytd) sales were up 4.5% to 7.04 million units.

Detroit automakers

General Motors' (GM) sales in May increased 3.0% y/y and were up 4.9% in the year to date. May's sales of 293,097 units brought the result for the first five months to 1,246,192 units. Overall, GM is benefiting from a consumer appetite for sport utility vehicles (SUVs) and pick-up trucks. Buick's sales were flat in May, an improvement on the decline of 5.2% y/y in April. In the ytd, Buick sales were down 3.6%. In May, the Enclave and Encore posted sales gains, while the LaCrosse, Regal, and Verano all saw sales declines in double digits. At Cadillac, continued struggles for the ATS, CTS, and XTS overshadowed gains for the Escalade and ageing SRX, and the brand saw sales fall 1.9% y/y in May. GM has restructured the ELR's pricing and the car's sales have improved - though they are still far below the one-time targets. Chevrolet's sales gained 1.4%, helped by the new Colorado and Trax. The Equinox was Chevrolet's second-best seller, after the Silverado, which saw sales gain 42% y/y. The consumer emphasis on pick-up trucks and SUVs benefited GMC, whose sales rose 12.5% y/y to 50,657 units in May - the gain was in Acadia and Canyon sales, as the full-size SUVs saw more than 20% y/y declines.

Ford Motor Company's sales slipped 1.3% y/y in May, as ramping up F-150 production continues. Ford is to reduce summer factory shutdowns to help improve the inventories of the F-150, Edge Escape, and Explorer. Over the first five months of the year, Ford suffered y/y sales declines in four months. In May, sales of cars and utility vehicles increased less than 1% y/y and truck sales fell 5.1% y/y. However, in the ytd the company saw a similar trend to the industry, with sales of cars down 1.5%, utility vehicles up 3.3%, and trucks up 4.0%. The Ford brand's sales dropped 1.5% y/y, impacted by a 5.1% decline in truck sales, flat utility vehicle sales, and a 1.8% increase in car sales. Lincoln sales picked up 3.7% y/y in May and were up 4.1% in the ytd. The MKC continues to sell well, though the MKZ is the highest-volume Lincoln vehicle and its sales declined 11.3%. The MKZ, MKX, and MKT all saw sales declines, though a new MKX arrives in late summer and the replacement for the MKS was teased by the Lincoln Continental on 1 April.

Fiat Chrysler Automobiles (FCA) US reported its 62nd consecutive month of y/y sales gains in May. FCA's car sales were up 27% y/y, with sales of trucks and utility vehicles down 1.9% y/y. FCA sold 151,465 trucks and utility vehicles in May, compared with 50,762 cars. Ram pick-up demand gained 7.6% y/y to 39,952 units. Fiat brand sales struggled in May, decreasing 18.9% y/y; however, the 500X SUV should bring improvement in the second half of the year. Chrysler brand sales gained 31.9% y/y for the month to 29,802 units; the 200 was mainly responsible for the gain, as that model's sales reached 20,007 units. Jeep accounted for 39.3% of FCA's US sales in May, achieving a 13.5% y/y increase. Dodge brand sales fell 21.8% - later in 2015, year-on-year comparisons are expected to be less difficult, as the loss of the Avenger is adjusted into the results.

Japanese automakers

Toyota's US sales were flat y/y in May, falling 0.3%, while in the ytd, sales were up 6.0% y/y. Toyota division sales were down 1.6%, with 212,908 vehicles sold. Lexus sales gained 10.2% y/y in May, with 29,671 units sold - the all-new NX brought in 4,014 units. Sales of Toyota trucks and SUVs were up 13.4% y/y in May, against a decline of 10.6% y/y in cars. The gap between car and truck sales grew to 24,990 units, in favour of car sales, in May. Scion continues to see sales erosion, though the latter half of the year should look better when the all-new iA and iM arrive.

American Honda reversed two months of declines with a 1.3% y/y sales gain in May. The Honda division saw flat sales (down 0.3% y/y), though Acura demand grew 16.1% y/y. Honda's Civic sales were ahead of CR-V sales, at 34,472 units versus 32,090 units; the HR-V sold 6,381 units. The Accord's sales increased 15.2% to 32,373 units, behind the sales of the Nissan Altima for the month. In the SUV market, Acura's MDX saw sales decline as an update is transitioned in. The TLX's sales in May were well ahead of the combined sales of the TL and TSX in May 2014, as the brand planned. Acura's MDX and RDX accounted for 63% of sales.

Demand for Nissan and Infiniti models was flat. Nissan brand sales fell 1.0%, with car sales down 11.3%. The Altima remains the best-selling Nissan model, with 33,630 units sold, a 6.7% y/y decline. The Rogue's sales rose 38.3% y/y to 25,901 units in May. Infiniti demand ticked up 0.9% y/y in May, with the Q50's sales of 3,423 units barely ahead of the QX60's 3,141 units. Subaru claimed another record sales month, the 42nd consecutive month of y/y growth. The Forester and Outback delivered 56% of the month's sales. Mazda's May sales declined by 0.4% y/y to 29,606 units; its SUV sales grew 16.0%, while car sales were down 9.9%.

Other automakers

Volkswagen Group saw sales grow in May, pulling the ytd results up. The Volkswagen brand saw sales grow 8.1% y/y to 34,758 units, though generally hurt by a lack of fresh product, particularly in the SUV category. Audi reported its 53rd straight month of sales growth, up 11.0%. Porsche saw declines in all model lines except the Cayenne, and sales fell 7.4%. Combined May sales for Hyundai (63,610 units) and affiliate Kia (62,433 units), which operate separately, declined 3.8%, with Hyundai's falling 10.3% and Kia's increasing 3.9%.

Outlook and implications

After a disappointing SAAR in April, May's US light-vehicle sales rebounded strongly. May is generally a strong sales month, with consumers flush with cash from tax returns, and upcoming summer vacation trips spurring strong demand. In an auto market where inventories remain at reasonable levels and month to month total incentives show small variations, this is a positive sign that auto consumers remain motivated in light of recent mixed economic news. The 17.7-million-unit SAAR in May is the highest monthly reading since July 2005 and one of the top 15 readings of all time.

Although US economic growth has been relatively weak in recent quarters, parts of the economy that remain strong will support a robust auto market through the summer. The stock market remains near all-time highs, consumer confidence continues to improve, housing starts and prices continue to rise and still have a long way to go before reaching pre-recession levels, and interest rates remain near record lows – all factors which will contribute to a strong light-vehicle market through the year. Overall, the strong May sales numbers were expected and are making up for some lost momentum in previous months of 2015. The IHS Automotive forecast for US light-vehicle sales in 2015 remains at 16.9-million units, though expectations of a stronger second half of the year could drive a slight increase in that figure.

May had 26 selling days, one less than in the same month a year ago. Given the selling-day discrepancy and tough year-ago (y/y) comparisons, auto manufacturers' performances were mixed for the month. Volume growth was led by FCA's 4.0% y/y improvement and followed by a 3.0% gain for GM. Honda's strong HR-V sales helped it to achieve a 1.3% y/y increase. Sales at the other major volume manufacturers were down for the month, with y/y declines at Ford, Nissan and Toyota. May is usually a strong month and comparisons are generally against a strong performance the year before.

Light-truck sales continue to dominate the landscape, keeping up after a weather-induced preference for all-wheel and four-wheel drive utility vehicles pushed sales in the first quarter. Through the first five months of 2015, light-truck sales were up 339,000 units compared with the first five months of 2014, while passenger-car sales declined by 25,000 units. In May, total passenger car sales were down 3.6% y/y, while light-truck sales were up 6.6% y/y and accounted for 54.3% of light-vehicle demand, compared with a 51.8% share in May 2014.

With the stronger sales in May, month-end vehicle stocks for the industry decreased compared with the level the month before, potentially putting some pressure on June's sales. Vehicle production remains strong, so no long-term imbalances are likely. Detroit manufacturers' inventories were down in May, with vehicle stocks slipping from their April levels at Ford (down 22,000 units to 597,000) and GM (down 25,270 units to 714,744), while FCA's inventory ended the month at 540,509 units, over 27,000 units lower than the month-end stock in April.