May brought the eighth year-on-year (y/y) US light-vehicle sales decline since 2009, with a seasonally adjusted annual rate (SAAR) of 17.38 million, little improved from April's 17.32 million. With two fewer selling days than in 2015, May sales slipped 6.0% y/y.
IHS Automotive Perspective
Significance
US auto sales in May declined 6.1% year on year (y/y), following somewhat slow sales in March and April. Only two of the top automakers posted improved sales for the month.
Implications
While conditions remain strong for another record sales year, IHS may revise down its 2016 full-year forecast.
Outlook
With a seasonally adjusted annual rate (SAAR) of 17.38 million units, May demand was up slightly from the April reading of 17.32 million units but well below the year-ago reading of 17.6 million. In view of the slower than expected start to the year, IHS may slightly downgrade its full-year 2016 projection in the upcoming June forecast round.
Detroit automakers
GM's reduction of fleet sales in 2015 is accelerating in 2016, with a target of cutting rental car sales in 2016 by 100,000 units and achieving a fleet mix target of about 20% throughout 2016. In May, rental-fleet sales were trimmed another 22,000 units. The company is also expecting to operate with about 70 days' supply in most months of 2016; May month-end inventory stood at 67 days. In May, sales dropped a significant 18.0%. In year-to-date (YTD) terms, sales slipped 5.0% year on year (y/y). Buick sales tumbled 22.1% y/y, pulling the YTD down by 1.3% y/y. Buick should register a stronger second half, as the mid-size Envision SUV arrives along with a new LaCrosse and a refreshed Encore. In May, however, it was reported that the Verano will be pulled after a short 2017 model year run. This will impact Buick into 2017 as the brand sold 2,070 Verano sedans in May 2016. Cadillac posted a decline of 16.0% in May sales. The XT5, which replaces the SRX, is ramping up availability, although its 2,791 unit sales this May were well below SRX's volume of 5,777 in May 2015. Chevrolet's sales dropped by 18.6% y/y in May and 5.4% y/y in the YTD. High-margin GMC sales were down 14.3% y/y in May and have shrunk 2.8% for the YTD, partly on the changeover to an all-new Acadia, while the Yukon and Canyon are still reporting improved sales.
Ford Motor Company has shown volatility over the first five months of 2016, with a decline in January, a surge in February, and modest increases for March and April. As with most automakers, May brought a sales decline for Ford, of 5.9%. Ford brand sales slipped 6.4% y/y in May but were up 3.8% for the YTD. Lincoln sales jumped 6.9% for the month and were up 14.7% for the YTD. Company-wide, car sales in May slumped 25.0% y/y while utility sales edged up 0.3% and truck sales were up 8.9%. Lincoln's improvement was in its utility vehicles, which were up 16.0%, contrasting with a 5.3% decline in cars. All Ford-branded cars posted lower sales than in May 2015. Mustang sales slipped 24.2%, while the Edge, Flex, and Explorer posted sales declines on the utilities side.
FCA US reported its 74th consecutive month of y/y sales gains, squeaking out a 1.1% y/y rise in May 2016. The increase was all on the Jeep brand, which reported a 13.7% y/y sales gain to 90,545 units. FCA now reports three categories: utilities, cars and MPVs, and trucks and light-commercial vehicles (LCVs). In May 2016, FCA sold 104,117 utility vehicles, 56,722 cars and MPVs, and 43,613 trucks and LCVs. Sales of utility vehicles gained 10.1% in the month, cars and MPV sales declined 11.5%, and truck and LCV sales were unchanged from a year earlier. As the company has announced its intention to drop the Chrysler 200 and Dodge Dart, FCA is shifting toward a strategy of reliance on trucks and SUVs for North America. Ram pickup demand declined 2.8% in May, while its competitors at Ford and GM reported sales gains. Fiat brand sales dropped 18.9% for the month, as combined sales for the 500 and 500L plunged 51.1% y/y. The declines at Fiat are all the more troubling as the addition of the 500X has not improved sales for the Fiat brand but only cannibalised the first two offerings. Dodge brand sales were down 5.4% in May, although the Charger, Caravan, and Durango recorded increases. Sales of FCA minivans combined grew from 12,073 units in May 2015 to 22,213 units in May 2016. The Pacifica is just getting its legs, recording only 2,495 units sold in May, while the Caravan posted a 76% sales gain in May.
Japanese automakers
Toyota sales also declined in May, with an overall drop of 9.6%. Toyota Division car sales slipped 14.9%, with declines for the Camry, Corolla, Prius, and Avalon. Toyota Division trucks were down 3.4%, with a 4.2% gain in SUV sales outweighed by a 9.9% decline for pickups. At Lexus, car sales shrank 22.9% and truck sales gained 3.4%. The all-new RX showed a healthy sales improvement, with NX sales flat.
American Honda sales fell 4.8% y/y in May, keeping the automaker ahead of Nissan for the month, although it trails in the YTD. Honda Division sales were down 2.9%, at 133,547 units, while Acura sales slumped 20.4% to 13,561 units. Honda's car lines again outperformed SUVs in May, edging down only 0.4% y/y, compared with a 5.8% y/y decline for Honda-branded trucks and SUVs. Sales of the all-new Civic gained 2.7%, making it easily the brand's best-seller in May and the YTD. CR-V demand declined 8.5%, facing a freshened Ford Escape and all-new Kia Sportage. Acura, which got 64.6% of its sales from the MDX and RDX, posted SUV sales down 11.7% and car sales down 17.4%.
Nissan Group was not immune to the May sales slump, although it posted a y/y decline of only 1.0%. In the YTD the company is up 7.4% (y/y) and ahead of Honda. Nissan Division sales slipped 1.3% while Infiniti sales gained 3.4%. Nissan Division car sales dropped 2.9%, while truck sales nudged up 0.8%. Infiniti's QX50 continues to register gains, although with volumes less than half those of the QX60. Infiniti's car sales slumped 47.1%, while SUV sales soared 62.4%.
Subaru claimed another record sales month, the 54th consecutive month of y/y growth, with a 1.1% gain. Only the WRX and BRZ specialty cars posted lower sales. Though Subaru's sales trend may have slowed from recent years' double-digit growth, the automaker has outsold VW Group in the YTD, even if not in May. Mazda reported a decline of 4.6% y/y for its May sales. Along with market forces, Mazda has been impacted by dropping the Mazda5 and changing over to the all-new CX-9.
Other automakers
Volkswagen Group sales slipped 9.5% y/y. Volkswagen brand sales dropped 17.2% while Audi reported its 65th straight month of sales growth, up 1.6%, and Porsche sales gained 7.3%. May sales for Hyundai (71,006 units, up 11.6%) and affiliate Kia (62,926 units, up 0.8%) combined for a 6.3% y/y increase, bucking the industry trend and narrowly beating the Nissan Group for the month.
Outlook and implications
With a seasonally adjusted selling rate (SAAR) of 17.38 million units, the May results were slightly above the April 2016 reading of 17.32 million and well below the year-ago reading of 17.6 million. Although manufacturer incentive levels continue to rise (along with average transaction prices, according to manufacturer reports), there is room for further increases as inventory levels grow, setting up potential for further SAAR developments over the upcoming summer months. With a slower than expected start to the year, IHS is considering a slight downgrade to its full-year 2016 projection in the upcoming June forecast round.
There were 24 selling days this May, two fewer than in the month in 2015. On a unit volume level, about 1.53 million vehicles were sold, down 6.0% y/y. YTD, US market sales remain in the black, up 1.2%.
With the two fewer selling days, year-ago comparisons for the automakers were down across most of the industry. Hyundai-Kia reported a combined gain of 6.3%, largely on breakout sales of the Tucson and Santa Fe, with FCA and Subaru reporting 1.1% gains. FCA's and Subaru's weak sales rises enabled them to continue impressive y/y sales improvement streaks. Some manufacturers, such as Ford (down 6.4%), Toyota (down 9.6%), and GM (down 18%), realised significantly lower volume on weaker demand for passenger cars. GM results were also dented by the company's ongoing efforts to reduce fleet sales. GM sold 22,000 fewer vehicles to rental fleets in May 2016 than in May 2015. Sales at the Volkswagen Group fell 9.5%, with Audi and Porsche offsetting a 17% tumble at the Volkswagen brand, as weak passenger car volumes combined with the lingering emissions scandal to bring the brand's worst May results since 2010.
On trend with 2015, light truck sales continued to outpace sales of passenger cars, rising 2.3% y/y in May while the car sector posted a 15.6% y/y decline. Spurred by utility vehicles of all types along with strong pickup sales, the light truck sector accounted for 57.8% of sales for the month, up from 53% in May 2015. With fuel prices expected to sustain their moderate level in the short-term forecast horizon, sales momentum within the light truck sector should continue throughout 2016.
Month-end inventories in the US for domestic automakers were up from April levels but to varying degrees. At Ford, unit stock totalled 723,000 units at the end of the month, down 19,000 units from April 2016, translating to a 77-days supply. Inventory at FCA was down less, falling 17,000 units for a stock of 602,064, or a 71-days supply. At GM, inventory also shrank just over 11,000 units to 670,517 units, or a 67-days supply.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.