New vehicle sales were up in May, driven in part by bigger incentives. Rising incentive spend could hurt used vehicle values by the end of the year. Photo by Eric Gandarilla.

New vehicle sales were up in May, driven in part by bigger incentives. Rising incentive spend could hurt used vehicle values by the end of the year. 

Photo by Eric Gandarilla. 

 

MCLEAN, Va. — New-vehicles sales in May grew by 4.8% on a year-over-year basis, according to J.D. Power’s June Used Car and Light Truck Guidelines.

This was a reversal from April’s 4.8% sales decline. Through May, the industry has sold 7.02 million units year to date, a 1.2% increase from the prior-year period. May’s seasonally adjusted annual rate (SAAR) came in at 16.18 million, which is up slightly from May 2017.

Strong Chevrolet and GMC sales helped General Motors reach 264,000 new-vehicle deliveries in May. Overall, year-to-date volume through May is up 4% for the manufacturer.

Hyundai, Jeep, and Mazda also had a strong showing in May, as unit sales for the respective manufacturers grew 11.5%, 28.8%, and 15.1%, respectively.

Incentive spend by manufacturers was also up in May, the 38th straight month of growing incentive spending. Average incentive spending per unit for the month was $3,740, a 6.6% increase from May 2017, according to Autodata.

Most of that incentive spend was focused on light truck and SUV vehicles, as average incentive spending on passenger cars declined 3.8% year over year, while light truck and SUV incentive spending rose by 12.8% over the same period.

While rising incentive spending does help move units at retail, it also has an adverse effect on used vehicle values. J.D. Power noted that one of the biggest factors that could negatively impact used-vehicle values at year end will be growing incentives. As of May 2018, incentives appear to be continuing to grow.

Originally posted on F&I and Showroom

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