An Early Look at May Sales

I have another monthly sales pacing report to share, but before we get to the numbers I thought it would be worthwhile to set a bit of context, specifically as it relates to the balance of the year.

Last month, sales started out fairly strongly, but the momentum faded as consumers owing tax on the 15th were left feeling a bit cash poor. Sales actually dipped to the point where the SAAR for the month dropped below 15m total units for the first time since last October.

Was this decline a short-term post tax day blip? Or have the sequester cuts and various tax hikes created a sales drag? It is interesting to look at SAAR over the past six months.

While April is the first month since October that sales dropped below the 15m SAAR level, the trend line is clearly negative. And in looking at the May SAAR so far--which is 14.8m--this trend is continuing.

I am not suggesting that any kind of sales collapse is imminent. Credit is flowing, housing prices are looking better, confidence is good and the stock market is hitting new highs. But as it relates to vehicle sales, the recovery is taking a breather and I suspect that in the months ahead, we will see manufacturers and dealers fighting hard for every sale.

Now here are the details on May...

So far retail sales are tracking for a SAAR of 12.0m units. (This compares with 1.05m units and a SAAR of 12.1m last month). If we assume a fleet mix of around 19.0% (about the same mix as last month), then May will end with total vehicle sales of around 1.40m and a SAAR of 14.8m. (This compares with last month's 1.28m units and 14.9m SAAR.)

Looking at month-to-month retail share, Mercedes-Benz is up significantly (+9%); Ford and Chrysler are up as well; while Honda is down 10% and the South Korean makes combined are down about 6%. Share for everyone else is largely flat.