U.S. sales of cars and light trucks fell 0.3 percent in May, but the month still felt like a winner for many industry participants as a big Memorial Day weekend erased fears of a much steeper drop after a slow start to the year.
If May results turn the tables on market pessimism, that could put some wind in the sails for the second half, barring a major disruption from auto tariffs the Trump administration is threatening against Mexico in particular and most of the world in general, analysts said.
Retail customers appeared to be holding back before the month's sales rallied to 1.59 million by the end of the holiday weekend.
"As each week progressed, the month was actually headed in the wrong direction," said Jeff Schuster, president of vehicle forecasts for LMC Automotive. "It was a big, blowout Memorial weekend. Holidays tend to be, but it has been usually more July 4 that gets the big boost than Memorial."
Final figures on incentives and fleet sales were still being analyzed last week, but Schuster and other analysts said that taken as a whole, the industry didn't appear to pull too many tricks to push product in May, aside from some late-month incentives.
"This appears to be a retail story for the month, and that appears to be where the boost came from, not necessarily on the fleet side," said Schuster, putting fleet sales at essentially flat compared with May 2018. "I have to believe that incentives are up," he added, based on the breakout holiday weekend and pickup sales.
ALG estimated that fleet sales would be lower by about 1 percent at 314,116 units compared with a year ago, and industry incentives would be lower by 10 percent on average at $3,359 per vehicle. Deutsche Bank put fleet sales up 11 percent in May compared with a year ago and incentives mostly flat.
The seasonally adjusted, annualized rate of sales in May came in at 17.4 million, well above the average 16.9 million forecast. That is up from 17.3 million in May 2018 and April's 16.4 million pace. The SAAR has slipped below 17 million three months this year, an early sign that the U.S. market continues to cool after four straight years of sales above 17 million light vehicles.
Edmunds noted that interest rates for new vehicles dipped to their lowest level this year in May at 6.1 percent on average, compared with 6.3 percent in April. That was partly attributable to a bump in 0 percent financing deals from automakers in May.
The no-interest deals covered about 5.7 percent of financed transactions compared with just 3.2 percent in April.