Vehicle scarcity puts May sales on the skids

It's shaping up to be an ugly summer for the auto retail industry, which is relearning an old lesson: You can't sell what you don't have.

A dearth of new vehicles, fueled by a gummed-up supply chain, drove double-digit sales declines for six of the seven automakers reporting for May.

Collectively, those automakers' U.S. sales skidded 31 percent from a year earlier, according to the Automotive News Research & Data Center. The group's sales for the year were down 20 percent.

Overall, U.S. sales slid 29 percent to 1.1 million last month, vehicle forecaster LMC Automotive said, leaving the market down 19 percent to 5.65 million through May.

The seasonally adjusted, annualized rate of sales for May fell to a 2022 low of 12.81 million, according to Motor Intelligence, down from May 2021's 17.12 million rate, which capped one of the hottest three-month stretches ever for the U.S. auto market.
Jesse Toprak, chief analyst at Autonomy, doesn't expect vehicle shortages to ease until the second half of the year.

"The wild card is whether the demand side will still be as forceful when more vehicles are finally available in showrooms," Toprak said. "Current market dynamics are forcing consumers to change their purchase and ownership patterns, resulting in a diversion of some demand to the used-car market — therefore running up the prices of pre-owned vehicles."

LMC cut its outlook for 2022 U.S. sales to 15 million vehicles, from 15.3 million, citing May's weaker-than-expected tally.

General Motors outsold Toyota Motor Corp., the leader in 2021 and the first quarter, by about 5,000 vehicles last month, and the Chevrolet Silverado was the top-selling vehicle, according to LMC.

Ford Motor Co. sales fell 4.4 percent last month. The automaker said nearly half of its retail sales came from previously placed orders.

Volume declined 4.3 percent at the Ford brand, with mixed results for the division's biggest sellers: the F-Series was up 6.9 percent; the Ranger was down 58 percent; the Explorer was up 19 percent; the Escape was down 55 percent; and the Bronco Sport was down 36 percent.

Lincoln volume dropped 6.8 percent.

Toyota Motor, with one of the industry's leanest stockpiles of new cars and light trucks, said volume tumbled 27 percent to 175,990 last month, with deliveries off 27 percent at both Toyota Division and Lexus. It was the 10th-straight monthly decline for the Toyota brand and fourth consecutive drop at Lexus.

All but one of the Toyota brand's top sellers, the RAV4, posted lower volume in May: the Corolla declined 18 percent; the Camry fell 34 percent; the Venza was off 68 percent; the 4Runner was down 1.5 percent; the Highlander was off 46 percent; and the Tacoma was down 31 percent.

U.S. sales of the RAV4, the top-selling compact crossover in 2021, rose 9.5 percent. Lexus' top seller, the RX crossover, posted sales of 8,749, down 2.3 percent.

American Honda Motor Co.'s deliveries slumped 57 percent to 75,491 last month, with volume off 64 percent at Acura and 56 percent at Honda. The Honda brand's bestsellers all posted significant declines: the Accord fell 58 percent; the Civic sunk 77 percent; the CR-V declined 59 percent; the Pilot was down 47 percent; and the HR-V was off by 26 percent.

Honda's U.S. inventories are at historic lows because of production cuts caused by parts shortages. The automaker said it started the year with only 20,000 Honda and Acura vehicles in dealer stock, compared with 300,000 going into 2021.

"We are experiencing record turn rates of more than 80 percent for the Honda brand, with nearly every unit a dealer touches in a month already sold," a Honda spokesman said last week. "More than half of our Civics and CR-Vs are sold before they ever even reach a dealer's lot. Our sales numbers do not reflect the true demand for our products."

Hyundai brand deliveries last month slid 34 percent to 59,432, with all of them retail, the company said last week. It was Hyundai's biggest decline since the start of the pandemic, when sales dropped 43 percent in March 2020 and 39 percent one month later.

The brand ended May with 18,641 vehicles in dealer stock, up from 15,809 at the end of April but far below the 91,249 that were available at the close of May 2021, a spokesperson said. Hyundai recorded zero fleet shipments for the fifth-straight month as it prioritized more profitable retail business.

Hyundai sales boss Randy Parker testified to strong consumer demand but still stressed capacity issues. The brand's current emphasis is to "fish where the fish are," Parker said, with Hyundai holding to a product mix that's 76 percent light trucks and 24 percent cars.

Tight inventories also mean Hyundai can slash incentives.

"Three years ago, we were spending about $4,000 per unit, and today we're below the industry average, spending less than $1,000 per car," Parker noted.

Genesis was the only one of the reporting brands to post a sales gain last month. The luxury brand saw sales climb 18 percent to a May record of 4,400 on higher G70 and GV70 sales.

Kia's May sales dropped 28 percent to 57,941.

Key crossover models, such as the Sorento, Seltos, Sportage and Telluride, suffered declines.

Subaru sales slid 25 percent to 42,526, extending the brand's losing streak to 12 consecutive months.

Volvo Car USA, meanwhile, posted a 29 percent decline. Mazda North America suffered the largest sales drop — 64 percent — for the month.

David Phillips contributed to this report.