Automakers reported a plethora of ugly, negative numbers in May. But despite an implosion in demand for sedans, the industry's selling rate rose slightly from April, keeping 2016 on track to break last year's U.S. sales record.
The 15 largest automakers all posted lower car sales than a year ago, including declines of at least 25 percent for the Detroit 3. At General Motors, sales of all vehicles fell 18 percent, resulting in the company's lowest market share since the 1920s.
LaNeve: Signs of strength
Cars have accounted for just 41 percent of the U.S. market so far this year, down from 50 percent for all of 2013. Barclays Capital analyst Brian Johnson said the country has plunged into a "sedan recession."
In May, the carnage affected all sizes and prices; sales in every car segment, including subcompact, compact, midsize, luxury and sporty, dropped double digits from a year ago. Overall, car sales dropped 16 percent and light-truck sales rose 2.4 percent, for a total industry decline of 6.1 percent.
For many shoppers, cars have become the equivalent of wide lapels and whitewall tires, said Gary Uftring, president of Uftring Auto Group in Peoria, Ill.
"We don't get a lot of ups on cars right now, as far as people even wanting a price on them," said Uftring, whose brands include Chevrolet, Ford, Nissan and Subaru. "Styling has changed, and what people want to be seen in is a crossover or a sport utility."
May's year-over-year comparisons were dampened by the month having two fewer selling days than in 2015 and four weekends instead of five. As a result, the only major automakers to post increases were Fiat Chrysler Automobiles, Hyundai-Kia and Subaru. (FCA US and Subaru both managed 1.1 percent gains, narrowly keeping their multiyear growth streaks alive.)
But the month's annualized selling rate, which factors in the calendar differences, came in at 17.46 million, roughly in line with December, January, February and April. Five months into 2016, sales are running 1.1 percent higher than last year's record pace when the industry sold 17.47 million light vehicles in the U.S.
The redesigned Chevy Malibu, shown, and Honda Civic were the only two of the 14 top-selling cars to have year-over-year sales increases in May.
Mark LaNeve, Ford Motor Co.'s vice president for U.S. marketing, sales and service, said he expects robust demand in the latter half of the year and doesn't see production cuts needed to control inventories.
"What needs to be low is still low: unemployment, interest rates, gas prices," LaNeve said on Ford's sales call last week. "What needs to be high is still high: consumer confidence; the housing market is nowhere near to historic highs; average age of the vehicles on the road is still over 11 years; average age of pickups -- half of them on the road are over 11 years. So, lots of reason to believe that we've got a very strong industry."
IHS Automotive said it's still confident in its full-year forecast for the industry of 17.8 million light-vehicle sales, which would be 1.8 percent more than in 2015.
"The outlook for the year remains for another record year, and nothing in May's results suggests otherwise," Stephanie Brinley, an IHS senior analyst, wrote in an email. "SUVs continue to perform well, to the detriment of car sales, and generally brands with stronger SUV lineups are reaping the rewards."
Record market share of 5.9 percent for Jeep, whose sales rose 14 percent, and an 81 percent increase in minivan sales pushed FCA ahead of its domestic rivals to become the industry leader in light trucks last month. It sold 170,277 trucks, compared with 167,433 for Ford Motor Co. and 166,647 for GM. A year ago, GM's trucks outsold FCA's by almost 43,000 and Ford's by nearly 34,000.
GM attributed its 15.7 percent May market share -- down from 20.8 percent five years earlier -- largely to a cutback in fleet deliveries and Japanese-made part supply disruptions that hampered launches of the Chevrolet Cruze and other new products. GM's retail sales fell 13 percent from last May, and total sales of the Chevy Silverado and GMC Sierra fell 11 percent.
Full-size pickups were an exception to the gains for light trucks, with a 3.1 percent decline. Ford was the only automaker to post higher sales in that segment, as the F series rose 9 percent in May and widened its year-to-date lead over the Silverado to more than 100,000 units.
'Sedan recession'
Last month was the worst May for the Mercedes E class since 2009.
Among car nameplates, May was almost universally awful. The Honda Civic and Chevrolet Malibu, both newly redesigned, were the only two of the 14 top-selling cars to post year-over-year increases.
In terms of volume, last month was the worst May since 2011 for the Toyota Camry and Prius, each of which lost about 7,000 units from May 2015. It was the worst May since 2010 for the Ford Focus and Fusion and the BMW 5 series, all of which dropped more than 20 percent. It was the worst May since 2009 for the Mercedes-Benz E class and Hyundai Sonata, and the worst month of any kind since 1999 for the Chevy Impala, down 54 percent.
Johnson, the Barclays analyst, warned that car sales and margins could deteriorate further.
"Excess supply and weak demand for sedans is likely to yield added price pressures," he wrote in a May 26 report. "One trend that may accelerate the sedan recession is weakness in deep subprime credit, which largely supports used car values -- especially for sedans."
Nowhere was consumers' rapid shift away from sedans more apparent last month than at Hyundai. The brand's car sales slipped 5.8 percent last month while its crossover sales nearly doubled.
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