May was a shocker: after months of exceeding forecasts, US light vehicle sales came up short. Sales were below even pessimistic estimates and the seasonally adjusted annualised rate (SAAR) was nearly half a million units below the lowest forecast.
May SAAR came in at 13.73m on a monthly volume of 1.33m cars and light trucks, according to Ward’s Auto’s John Sousanis, who had predicted a SAAR of 14.56m. That was the lowest reading SAAR last December and the first month in 2012 that it had fallen below 14m.
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Based on early-month trends, everyone was expecting a good result with a strong finish over the Memorial Day holiday weekend.
Manufacturers did their best to make it so: Edmunds.com’s Jessica Caldwell estimated industry-wide incentive spending rose 3.9% compared to April 2012 and 0.6% compared to last May.
Sales were up 16.1% but May 2011 results were the first to be impacted by the March Japanese earthquake and tsunami so a fair year on year comparison is difficult.
Some expectations did pan out: sales of Japanese vehicles, especially Toyotas and Hondas, came roaring back. Adjusted results for Toyota showed sales skyrocketed 72.9% in May; Honda sales jumped 36.3%. Nissan, which took a smaller hit, posted a smaller 11.0% gain. Overall Japanese sales volume was up 50.7% and market share rose 6.1 points to a 36.5% piece of the pie.
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By GlobalDataJapan’s gain was everyone else’s loss: Detroit’s market share shrank by 4.0%; the Koreans gave up 1.2% and the Germans chipped in about 0.6%.
There was good news: Among May’s benchmarks were Kia’s four-millionth US sale; all-time best Mays for Audi, Daimler, Hyundai, Kia and Subaru; Volkswagen’s best May since 1973 and an all-time record for US Passat sales.
May results have some concerned; economic factors like jobs growth and the European situation might be coming into play. US unemployment rose slightly to 8.2% last month. On the other hand, the price of petrol has dropped 6.9% from its peak in early April and the credit for new car loans continues to expand.
For guidance, look at sales and SAAR trends over the past few years. With the caveat that “past performance is no guarantee of future results”, sales so far in 2012 are tracking the past few years. In each year from 2009 to 2012, sales volumes have risen strongly in the first few months, followed by a dip in April and a rise in May, just as happened this year. Last year, shortages of popular Japanese vehicles led to a slump that continued until a strong upswing ended the year with about 12.8m sales.
Extrapolating from this data gives us between 14m and 14.5m sales for 2012, which is generally what has been predicted by most industry watchers.
There is a small cloud around this silver lining: ‘pent-up demand’ may be nearing the end of its run. Year over year growth has been shrinking. The January-May total in 2010 was up 17.2% from 2009, the same in 2011 was up 14.0%; 2012’s is up just 13.4%. Growth is growth, but this bears watching if only so that we may all temper our expectations.
