F-Series drives Ford increase; Toyota snaps losing streak; Honda surges again; Hyundai, Kia post double-digit gains in May

U.S. light-vehicle sales rose 23 percent to 1.359 million in May, GlobalData said in a report Friday, as retail selection improved, consumer incentives rebounded and automakers filled a backlog of fleet orders.

The preliminary final tally was higher than forecasts for an 18 to 20 percent rise in May volume, as estimated by J.D. Power, GlobalData, TrueCar, Cox Automotive and S&P Global Mobility. Retail sales totaled 1.094 million while fleet shipments came in at 265,000, or 19.5 percent of the market, GlobalAuto said in the Friday report.

The seasonally adjusted, annualized rate of sales in May came in at 15.1 million, Motor Intelligence reported, higher than the range of forecasts of 14.5 million to 14.9 million vehicles. The May SAAR is down from April's 16.15 million rate but up sharply from 12.73 million in the previous May, which marked 2022's slowest sales pace.

The sharp rebound from 2022's weakest month was driven by consumers returning to showrooms as selection improved and incentives rise, as well as continued strong fleet demand as automakers filled a backlog of orders from daily rental companies and commercial users. J.D. Power and GlobalData had estimated fleet sales would increase 50 percent in May from a year earlier.

GlobalData said economic concerns and still-elevated transaction prices likely prevented the market from reaching an even higher plane in May. In another sign of recovery and improved inventory, the daily selling rate was 54,400 units in May according to GlobalData's initial estimate, up from April's 52,600 units a day.

“The current strength of the U.S. market is undisputable, benefiting from both an improved inventory environment and a return of incentives to offset the high transaction prices and elevated interest rates," said Jeff Schuster, head of global vehicle forecasts at GlobalData. "While we are still concerned that the recovery could lose momentum as pent-up demand is satisfied, there is growing optimism that the U.S. market will continue to outperform expectations through the summer months."

Big pickups helped Ford Motor Co. post its sixth consecutive gain, the Toyota division snapped a four-month losing streak, Honda Motor Co. surged again, and U.S. sales advanced for the 10th-straight month in May at Hyundai and Kia, helped by rising inventory and incentives and sharply higher fleet deliveries.

Toyota Motor Corp.'s May sales rose 6.4 percent to 187,204, with the Toyota brand up 3.7 percent and Lexus advancing 25 percent. Light trucks, up 11 percent, provided a major lift for the Toyota brand, offsetting a nine percent decline in cars. And combined sales of the Tacoma and Tundra pickups rose 35 percent to 31,048.

The automaker said it ended May with 153,742 Toyota and Lexus models in stock, with 27,255 at dealers and 126,487 in ports or in transit.

Ford Motor Co. on Friday said May U.S. sales rose 11 percent, with the Ford division up 12 percent but Lincoln down 14 percent. Led by a 43 percent increase in F-Series volume, Ford's overall pickup deliveries rose 32 percent last month.

Ford and Lincoln's combined utility vehicle sales dropped 9.7 percent with mixed results for core models — Bronco Sport, up 11 percent; Escape, up 32 percent; Bronco, down 13 percent; Edge, down 17 percent; and Explorer deliveries off 26 percent. 

Sales at the Ford division have climbed sixth straight months now, while Lincoln volume has dropped three consecutive months. Lincoln's top three U.S. sellers in 2022 are all down so far this year: Corsair, off 42 percent; Nautilus, down 3.3 percent; and Aviator, off 16 percent.

Ford said it ended May with gross stocks of 383,000 vehicles.

Three core models — Accord, up 81 percent; Civic, up 98 percent and CR-V, up 95 percent — helped Honda Motor Co. to a 58 percent increase last month, with Honda division volume rising 53 percent and Acura up 146 percent. May marked American Honda's third straight monthly increase after a stretch of declines prompted by severe inventory shortages, resulting from tight microchip supplies and shipping woes.

The Honda division said sales of electrified models set a monthly record of more than 32,000 units in May.

American Honda reported Honda ended May with 34,000 vehicles on the ground, up from 12,000 a year earlier, and Acura had about 21,000 vehicles in stock, up from 4,000 at the start of June 2022.

Hyundai deliveries jumped 18 percent to 70,001, with retail volume rising 8 percent to 64,070. The company said it delivered 5,931 vehicles to fleet customers, or 8.5 percent of total May sales.

Hyundai ended May with 47,671 light vehicles in U.S. inventory, down slightly from 49,045 at April's close but more than double the 18,641 units in stock in May 2022.

Kia, still hampered by one of the industry's lowest stockpiles, reported U.S. sales of 71,497, a jump of 23 percent and the company's second-best month ever. Four of the brand's core models — Soul, Seltos, Telluride and Carnival — posted big gains. Kia said its U.S. retail sales — a corporate priority — rose 21 percent to 65,197 last month, while keeping fleet deliveries around 8.5 percent of overall volume, or roughly 6,300 units in May.

“More than two out of every three Kia vehicles sold in the U.S. today is a utility vehicle," said Eric Watson, vice president of  sales operations for Kia America. "In combination with our growing lineup of advanced electrified offerings, we have strong tailwinds to push our business forward for the remainder of the year.”

Subaru deliveries jumped 28 percent to 54,531 in May, the company's tenth straight increase, behind three core models — Crosstrek, up 5.7 percent; Outback, up 17 percent and Forester, up 93 percent. 

Mazda's sales advanced for the eighth consecutive month with May volume rising 117 percent to 33,262 vehicles.

Genesis set a May record with sales of 5,605, an increase of 27 percent, with the luxury brand's two crossovers, the GV70 and GV80, and electrified variants of the G80 and GV70, driving most of the month's gain. Genesis sales have now advanced seven consecutive months.

Volvo reported a 14 percent increase in May deliveries.

Most of the rest of the industry reports U.S. sales at the close of each quarter, though GlobalData said General Motors was the top seller for the 10th straight month in May.

Retail inventory stood at 1.3 million in May, up 48 percent from May 2022, J.D. Power and GlobalData forecast. Toyota, Kia, Honda, Lexus, BMW, Subaru, Land Rover, Hyundai, Cadillac and Nissan had the industry's leanest stockpiles last month, Cox Automotive said, while Jeep, Infiniti, Jaguar, Buick, Ram, Chrysler, Dodge, Mini, Lincoln and Audi had the highest inventory levels.

Discounts continue to rise broadly across the industry as inventories rebound and automakers move to alleviate the higher costs of borrowing amid increased interest rates. TrueCar estimated incentives averaged $1,931 last month, up 64 percent from May 2022 and 13 percent from April. Toyota, still hampered by lean stockpiles, was the only automaker with incentives under $1,000 last month, TrueCar estimated. Three automakers — Stellantis, Daimler and BMW — saw discounts climb above $3,000 last month, TrueCar estimated, while average incentives at General Motors, Ford and Volkswagen Group rose above $2,000.

Chevrolet offered 1.9 percent financing on select crossovers and SUVs for qualified buyers who financed through GM Financial, with payments waived for 90 days. Some Stellantis dealers are offering as much as $12,000 off a Jeep Grand Wagoneer.

J.D. Power and GlobalData said discounts on leased vehicles have risen significantly in recent months, with leasing expected to account for 21 percent of retail sales in May, up significantly from a low of 16 percent in September but still below May 2019, when leased vehicles made up nearly 30 percent of all new-vehicle retail sales.

• There were 25 selling days last month, one more than in May 2022.
• The average incentive per new light truck was expected to be $1,698, up 74 percent, or $721, from May 2022, J.D. Power and GlobalData said, while the average spending on cars was expected to be $1,421, up 66 percent, or $567, from a year earlier.
• Average new-vehicle retail transaction prices remained elevated in May, rising an estimated 0.7 percent to $45,838 from a year earlier, J.D. Power and GlobalData forecast, but continuing to slide from the record high of $47,362 set in December.
• The average interest rate on new vehicles was 7.1 percent in May, slightly higher than in April, TrueCar estimated, and the average loan term for a new vehicle was about 69 months.

“After a particularly robust result in April, it would not have been surprising if May sales were a little disappointing, but instead, we interpret May’s outcome as another encouraging one for the industry. With one fewer selling day than April and two fewer
than March, volumes were within 10k units of either month. The fact that the daily selling rate was the highest in two years is another indicator that conditions remain healthy despite lingering concerns over a potential recession and higher interest
rates."

— David Oakley, manager of Americas sales forecasts and global data at GlobalData

"With increased supply comes increased negotiating power for consumers in the market for a new vehicle — as 40 percent of vehicle listings now reflect a price below MSRP, compared to less than 25 percent a year ago. While certain models continue to be difficult to find, savvy consumers are better positioned to find a deal now than they have been since the pandemic."

— Matt Trommer, associate director of market reporting at S&P Global Mobility

"New-vehicle prices appear as if they are starting to weaken. The average new-vehicle listing price is around 5 percent above last year, but the rate of growth has weakened in recent weeks. It may reflect more discounting offered across the industry. This could increase over the summer."
— Charlie Chesbrough, senior economist at Cox Automotive