Unless the factories break out big advertising and incentive programs -- and don't look for that anytime soon -- the slow sales of May are likely to continue well into summer.
Despite Toyota's marketing blitz last week, following its lousy May results, automakers and dealers don't expect a big industrywide sales push until Japanese brands restock.
So the market is stuck in limbo -- a standoff between automakers unwilling to offer big incentives without adequate inventory and recession-hardened consumers willing to wait for fat spiffs.
The post-earthquake supply shortage for Japanese brands changed all automakers' approach -- no stock, no advertising, no incentives and "retailers letting the customer walk" rather than selling units without firm replacement dates, said Mike Jackson, CEO of AutoNation.
"That kind of pullback in a fragile economy with high fuel prices will have an immediate impact," he said.
The raw numbers were jarring in May. After eight straight months of double-digit growth, light-vehicle sales fell 4 percent from May 2010. The annual selling rate slumped to 11.8 million, down from 13.2 million in April. It was the lowest seasonally adjusted annual sales rate since August.
In addition, quake-related vehicle shortages skewed May results. The Detroit 3 grabbed half the market; Chrysler Group outsold Toyota/Lexus/Scion and Honda/Acura; Japanese brands lost 7.3 points of market share; and Hyundai-Kia gained 2.8 percentage points.
Buyers reacting to gasoline prices that peaked in mid-May at $3.91 a gallon switched to fuel-efficient vehicles, turning a supply shortage of Japanese small cars into a pinch point for the entire industry.
Average per-vehicle incentives fell to $2,017 in May, the lowest monthly level since 2002, said TrueCar.com.
And U.S. transaction prices soared to record levels: an average of $29,817, up $608 from May 2010 and $215 from April.
Those high prices scared off many customers, said Steve Landers Sr., a partner in RLJ-McLarty-Landers, a 20-store group based in Little Rock, Ark. "They're kicking the tires, but without incentives, new-car sales are slowing," he said. "It's getting harder to close the deal."