U.S. light-vehicle sales slipped 0.5 percent in May, even with higher discounts and strong truck demand, as the auto industry prepared to limp from one key selling season to another.
The seasonally adjusted, annualized rate of sales fell to 16.7 million, down from 17.2 million in May 2016, on weaker fleet volume across the industry. A survey of 11 analysts by Bloomberg in late May put the average estimate for May's SAAR at 16.8 million.
May marked the third straight month the SAAR has come in below 17 million after six months above that key threshold. Last year's sales total of 17.54 million was a record.
The lack of consumer demand, notably for cars, even amid readily available financing, low gasoline prices and strong job growth belies underlying weakness within the market.
“We are seeing an artificially sustained market,” said Mark Wakefield, a managing director and head of the automotive practice at consultant AlixPartners. “It’s undeniable that retail demand is down. It’s not only down, it’s down fairly steadily in the first five months of the year. It’s not like it’s bouncing around and you can’t really see the trend.”
Ford, Nissan and Honda posted U.S. sales increases in May while General Motors, Toyota, FCA and Hyundai-Kia fell as the industry fell just short of capturing its first monthly sales gain of the year.
Ford Motor Co.'s 2.3 percent advance, aided by fleets, marked its first increase since December. Nissan North America benefited from a spike in discounts in recording a 3 percent jump. GM dropped 1.3 percent as the company continued to dial back on shipments to daily rental agencies. After five months, Toyota Motor Corp., Fiat Chrysler and Hyundai-Kia are still looking for their first advance of 2017.
Truck sales remained strong, rising 6.2 percent in May, even after they dipped in April, while weak car demand persisted in May, with volume off 10 percent. Among key car segments, subcompact demand skidded 19 percent and midsize car deliveries dropped 12 percent.
"While demand for new vehicles is sill relatively strong, it's a bit of smoke and mirrors," said Jessica Caldwell, head of industry analysis at Edmunds. "Dealers and automakers really pushed the deals over the holiday weekend to prop up their May numbers. Incentives were up sharply, and it seems automakers are putting more cash on the hood to nudge car shoppers to buy versus lease."
Light-vehicle sales across the industry had been forecast by analysts to rise slightly last month, helped in part by one extra selling day.
Edmunds' Caldwell said finance incentives rose 33 percent year over year in May, compared with a 28 percent jump in lease incentives and an 18 percent increase in cash incentives.