May new-vehicle sales struggle but show signs of rebound

Retail new-vehicle sales in May are projected to fall 21% compared with the same prior-year period, dropping to 1.08 million units, according to data released today from TrueCar ALG . Total SAAR is expected to decrease 32% to 11.8 million units, down from 17.4 million units in 2019. While sales numbers are still pacing far behind 2019’s benchmark, due to the COVID-19 economic crisis, the automotive industry is showing signs of rebound, said Eric Lyman, chief industry analyst at ALG. “Our own consumer research has shown that 72% of car shoppers state that their need for a vehicle has remained the same or increased due to the pandemic.” Rising consumer sentiment coupled with the Memorial Day weekend — one of the biggest car-buying holidays — signal that the industry could be crawling out of the last nine weeks of historic sales declines. “Memorial Day Weekend is traditionally a major car-buying holiday,” Lyman said. “The extra weekend in May, along with the outpouring of OEM incentives in response to COVID-19 and the reopening of state economies and dealership showrooms, is helping buoy May vehicle sales.” In fact, consumers are taking interest in incentive promotions offered by OEMs, including 0% APR on longer-term loans. Consumers opting for these special promotions, especially 84-month loans, doubled two weeks ago, according to data from J.D. Power . Consumers are also becoming more comfortable with online vehicle purchases, according to Lyman, which helps pad sales declines. Digital leasing and retailing app Rodo , for one, saw an increase in consumer interest on its platform at the beginning of May, according to Chief Executive Nathan Hecht last week. Still, the industry is grappling with headwinds. Rental car conglomerate Hertz, which filed for bankruptcy last Friday, could potentially inject its fleet of vehicles into the used-vehicle market in a liquidation event, further squeezing new-vehicle sales if retail used-vehicle values decline.

May new-vehicle sales struggle but show signs of rebound

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