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Wednesday, 25 May 2022 12:36

May Auto Sales Expected to Fall to Slowest Pace in 2022

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With no relief from elevated prices and tight new-vehicle inventory, U.S. auto sales in May are expected to drop to their lowest level of the year.

According to the Cox Automotive forecast released May 25, the seasonally adjusted annual rate (SAAR) of new-vehicle sales in May is expected to hit 13.1 million, a step backward from April's 14.3 million level and far below the 16.9 million level posted in May 2021. 

 

May sales volume is forecast to finish near 1.14 million units, down 9% from last month and nearly 28% from one year ago. Last year, in May 2021, new-vehicle sales reached 1.59 million, the second-best month of 2021 by volume, behind only March.

 

While high prices and tight inventory are negatively impacting new-vehicle sales this month, the low sales volume can also be attributed to the calendar. There are 24 selling days this month, three fewer than last month and two fewer than May 2021.
  
Tight inventory isn't the only headwind facing the market. Other issues may be having a growing impact.

 

Rising interest rates and higher prices, and the resulting increase in monthly payments, are likely hurting demand as well. Vehicle affordability in the U.S. continues to worsen, according to the Cox Automotive/Moody's Analytics Vehicle Affordability Index. In addition, lower consumer optimism in the wake of high inflation, surging gas prices and a volatile stock market may be keeping some potential buyers from entering the market. 

 

"Historically, the daily sales pace is higher in May than in most other months, with spring optimism in the air, thoughts of summer road trips on the horizon, and the buzz of Memorial Day sales," said Charlie Chesbrough, senior economist at Cox Automotive. "But many of the industry's normal patterns have been overturned by tight inventory and the lingering effect of the global pandemic."

 

Source: Cox Automotive