Ford said the F-Series continued to turn at record rates last month, with 59 percent of retail sales coming from previously placed orders. Overall, U.S. sales of the F-Series, the nation's top-selling light vehicle, rose 6.9 percent to 49,454 in May.
The U.S. light-vehicle market lost more momentum in May, with six of seven automakers that report monthly results racking up double-digit declines, casting more doubt about the strength of what many companies expect will be a second half recovery as tight parts supplies ease.
The seasonally adjusted, annualized rate of sales for May fell to a 2022 low of 12.81 million, according to Motor Intelligence, down sharply from April's 14.6 million pace and May 2021's 17.12 million rate, which capped one of the hottest three-month stretches ever for the U.S. auto market.
LMC Automotive on Friday pegged the May SAAR at 12.7 million, down by 1.8 million units from April.
Overall, May sales slid 29 percent to 1.11 million, LMC Automotive said Friday, leaving the market down 19 percent to 5.65 million this year through May.
In a sign of the industry's inventory struggles, even amid healthy consumer demand, the SAAR has climbed above 15 million units just once -- 15.2 million in January -- since June.
And underscoring the uneven impact of global parts shortages and logistical delays, LMC Automotive said deliveries of imported vehicles – notably those built in Asia – fell 44 percent in May, while sales of models built domestically fell 24 percent.
LMC Automotive on Thursday cut its outlook for 2022 U.S. sales again, to 15 million units, from 15.3 million, citing May's weaker-than-expected tally. U.S. sales of new cars and light trucks rose 3.3 percent to 15.06 million in 2021, a slight recovery from 2020 when the pandemic upended volume.
But deliveries slid 16 percent in the first quarter and are on track for another steep decline in the second quarter as output remains throttled by microchip and other parts shortages. Inflation and record gasoline prices are also deterrents to a second-half rebound, analysts say.
"The market faces a real risk of turning negative from 2021," Jeff Schuster, head of global vehicle forecasts at LMC Automotive, said Thursday. "We still have a lift in sales in the second half but it is plausible that an increase will not materialize this year and we could continue to track in the 14 million to 15 million unit selling rate for the remainder of the year."
May volume fell 4.4 percent to 153,434 at Ford Motor Co. and by double digits again at Toyota Motor Corp., Hyundai and Kia as choked supply chains continue to batter automakers, leaving showrooms and lots nearly bare of new cars and light trucks.
General Motors outsold Toyota Motor Corp., the sales leader in 2021 and the first quarter, by about 5,000 units last month, LMC Automotive said Friday.
Deliveries in May declined 4.3 percent at the Ford brand, the fourth straight monthly decline, with mixed results for the division's biggest sellers: F-series, up 6.9 percent; Ranger, down 58 percent; Explorer, up 19 percent; Escape, down 55 percent, and Bronco Sport, down 36 percent. Lincoln volume dropped 6.8 percent in May, its 12th consecutive decline.
Ford said nearly 50 percent of its retail sales last month came from previously placed orders.
Toyota, with one of the industry's leanest stockpiles of new cars and light trucks, said volume skidded 27 percent to 175,990 last month, with deliveries off 27 percent at the Toyota division and Lexus. It was the tenth straight monthly decline for the Toyota brand and fourth consecutive drop at Lexus.
All but one of the Toyota brand's top sellers, the RAV4, posted lower volume in May: Corolla, off 18 percent; Camry, down 34 percent; Venza, off 68 percent; 4Runner, down 1.5 percent; Highlander, off 46 percent and Tacoma, down 31 percent.
U.S. sales of the Toyota RAV4, the top-selling compact crossover in 2021, rose 9.5 percent. Lexus' top-seller, the RX crossover, posted sales of 8,749, down 2.3 percent.
Honda Motor Co.'s deliveries slumped 57 percent to 75,491 last month with volume off 64 percent at Acura and 57 percent at Honda. The Honda brand's best sellers all posted a significant drop in sales: Accord, off 58 percent; Civic, down 77 percent; CR-V, down 59 percent; Pilot, off 47 percent and HR-V, down 26 percent.
A dip in production prompted by parts shortages has left Honda's U.S. inventories at historic lows. The automaker started the year with only 20,000 Honda and Acura vehicles in dealer stock, compared to 300,000 going into 2021.
"We are experiencing record turn rates of more than 80 percent for the Honda brand, with nearly every unit a dealer touches in a month already sold," a spokesman said Wednesday. "More than half of our Civics and CR-Vs are sold before they ever even reach a dealer’s lot. Our sales numbers do not reflect the true demand for our products."
Hyundai deliveries last month slid 34 percent to 59,432, with all of them retail, the company said Wednesday. It was Hyundai's biggest decline since the start of the pandemic when sales dropped 39 percent in April 2020 and 43 percent in March 2020.
Hyundai ended May with 18,641 vehicles in dealer stock, up from 15,809 at the end of April but off from 91,249 at the close of May 2021, a spokesperson said. The company recorded zero fleet shipments for the fifth straight month as it prioritizes more profitable retail business.
"There continues to be extraordinary consumer demand for Hyundai vehicles, with dealers selling every vehicle they get," Randy Parker, senior vice president for national sales at Hyundai Motor America, said in a statement. "We expect demand to remain strong and inventory levels to improve later in 2022."
Kia's May sales dropped 28 percent to 57,941 on sharply lower car deliveries, as well as a decline in key crossovers such as the Sorento, Seltos, Sportage and Telluride.
Kia said its dealer stocks continued to hover around 9,000 cars and crossovers at the end of May, or 30,000 below May 2021 levels.
Subaru's May sales slid 25 percent to 42,526, extended its losing streak to 12 consecutive months. Mazda volume skidded 64 percent, it's second straight monthly decline.
Among other luxury brands, volume dropped for the ninth straight month at Volvo, while Genesis sales rose 18 percent to a May record of 4,400 on higher G70 and GV70 sales.
The rest of the industry reports U.S. sales on a quarterly basis.
Overall, forecasters expected sales to drop 17 to 28 percent last month from May 2021, which, at 1.59 million vehicles, was the second-best month in 2021.
"Historically, the daily sales pace is higher in May than in most other months, with spring optimism in the air, thoughts of summer road trips on the horizon and the buzz of Memorial Day sales," said Charlie Chesbrough, senior economist at Cox Automotive. "But many of the industry's normal patterns have been overturned by tight inventory and the lingering effect of the global pandemic."
A chronic shortage of microchips worldwide continues to dampen production, and severe COVID-19 lockdowns in China's main auto manufacturing hubs, notably Shanghai, have hampered parts output and shipments to North America.
J.D. Power and LMC Automotive said new-vehicle retail inventories ended May below 1 million vehicles for the 12th consecutive month.
In North America, car and light-truck production rose only 4.4 percent in the first four months of the year, according to the Automotive News Research & Data Center, with output down at five automakers: Toyota, Honda, Nissan, Volkswagen and Volvo.
In Cleveland, Toyota ads routinely tell TV viewers that new vehicles are arriving at local showrooms daily. What's not mentioned: Many of them have already been sold.
At Motorcars Toyota in Cleveland Heights, Ohio, the wait for a new Sienna – the nation's top-selling minivan in 2021 – is now 12 months. The backlog for delivery of the all-new Toyota Corolla Cross crossover is becoming just as long.
Derek Roberts, sales manager at the dealership, said of the 98 new vehicles last weekend in stock, in transit or allocated in coming weeks, 79 were already reserved. On Saturday, on what is normally a busy Memorial Day weekend, there was one new vehicle available for sale – a white 4Runner SUV.
Honda has advised some U.S. dealers that the company's lean inventories won't improve meaningful until at least October 2023. That means some dealers can't expect to receive, on average, more than 20, maybe 30 or 40, new light vehicles a month to sell. And when inventory does return to normal, Honda is telling dealers it won't be what they are used to – row after row after row of shiny new Civics, Accords and CR-Vs.
With new-vehicle inventories sparse, and consumer demand still high, the average incentive on a new vehicle is expected to decline from $2,726 in May 2021 to $965 last month. Incentive spending as a percentage of the average sticker price is forecast to fall to a record-low 2.1 percent, down 4.4 percentage points from May 2021, J.D. Power and LMC Automotive said. TrueCar estimates incentives dropped 59 percent to $1,251 in May vs. May 2021, with five automakers – Honda, Toyota, Kia, Subaru and Hyundai – having discounts per vehicle well below $1,000. (See nearby chart.)
The average transaction price for a new car or light truck is expected to reach a May record of $44,832, J.D. Power and LMC Automotive predict, a 16 percent increase from a year earlier and the third-highest level on record.
"We're continuing to see a struggle for supply among the industry, however, we're also now starting to see signs of demand adjusting," said TrueCar analyst Nick Woolard. "Higher interest rates combined with higher fuel prices present a headwind to demand."
"The severe drought in vehicle inventories continued to clash with otherwise healthy consumer demand in May. We expect a gradual improvement in supply levels in the second half of the year. However, the wildcard is whether the demand side will still be as forceful when more vehicles are finally available in showrooms. Current market dynamics are forcing consumers to change their purchase and ownership patterns, which is resulting in a diversion of some demand to the used car market -- therefore running up the prices of pre-owned vehicles. In addition, we are seeing leasing rates dipping below 20 percent and forcing consumers to keep their existing vehicles longer since they can't find other reasonable options. There is a looming danger of demand not sustaining its current strength when we finally have ample supply. The OEMs may again have to utilize incentives under that scenario."
-- Jesse Toprak, chief analyst at Autonomy
"There is not enough supply of sellable vehicles to support demand, and that issue is not expected to improve enough through the rest of the year to overcome the new risks. As recovery is pushed out even further and consumers feel more of the effect of rising prices, lack of demand may become the issue once supply can catch up after 2023."
-- Jeff Schuster, president of Americas operations and global vehicle forecasts at LMC Automotive Omari Gardner and Carly Schaffner contributed to this report.
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