IRVINE, Calif. — Ahead of its June 1 call to discuss May’s sales results, Kelley Blue Book (KBB) issued its predictions for this month’s new-vehicle sales. The vehicle information site said it expects new-vehicle sales to remain flat with a year ago at 1.53 million units.
If realized, the prediction puts the seasonally adjusted annual rate (SAAR) at 16.7 million. May 2017 had 25 sales days compared to 24 in the year-ago period.
“We could see a positive month for the industry for the first time this year in May, but Kelley Blue Book expects totals to finish about even year over year, despite one extra selling day in 2017,” said KBB analyst Tim Fleming. “Retail numbers for May are expected to finish strong, however, they continue to be supported by considerable incentives and lease subvention.”
Fleming also noted that leasing appears to be peaking, which is expected given declining residual values. But the trend, Fleming said, is contributing to this year’s slowing sales.
At 1.53 million units, including fleet sales, May sales results would be up 7% from April. If realized, the 16.7 million SAAR would be down from last May’s 17.1 million SAAR and down slightly from April 2017’s 16.8 million SAAR.
Retail sales are expected to account for 80.5% of volume in May 2017, slightly up from 78.9% in May 2016.
By OEM, General Motors is poised to gain market share this month thanks to SUV sales, specifically the new GMC Acadia and Buick Envision. In fact, GM could see its SUV sales volume increase by more than 15%, according to KBB, which would offset any potential declines from its car and pickup truck models.
In contrast, Hyundai-Kia could see one of the largest declines in May, with volume expected to drop more than 4% year over year. The OEM still faces challenges regarding the shifting demand toward SUVs. And compared to the other major manufacturers, Hyundai-Kia has the highest sales mix of cars at 69%. The industry average sits at 37%.
Looking at the sales mix for May, KBB said there is a clear divide in the market between cars and light trucks. In May, Kelley Blue book anticipates the sales mix of cars to reach 38%, down 3% year over year. While SUV segments continue to see the most significant gains, full-size trucks are expected to increase market share by 0.5% in May, though deeper discounts and incentives are partially responsible for the growth, Fleming said.
“Consumers are continuing to defect from the mid-size car segment at a rapid pace,” Fleming noted. “Most commonly, they are turning to the compact SUV/crossover segment. As such, Kelley Blue Book expects mid-size cars to lose more than one point of share in May, while compact SUVs are expected to pick up nearly one point of share.”
Originally posted on F&I and Showroom