U.S. Auto Sales in May Get a Boost from Demand for Large Pickups
A monthly update from J.D. Power & Associates' Power Information Network(R) (PIN) and strategic forecasting partner LMC Automotive indicates that in the first 16 selling days of the month,* demand for large pickups already has helped drive sales ahead by 10% from May 2012. As a result, large pickup sales are projected to rise in double digits on a percentage basis from the same month a year ago, continuing a recent trend.
During the first three weeks of May, full-size trucks accounted for 11.4% of the industry's retail sales (new vehicles sold at dealerships), which is up from an already robust 11% share of retail sales last month in April 2013. A year ago in May, large pickups comprised only 9.7% of the industry's retail sales mix--1.7 percentage points below this year's early May share.
Stronger large pickup sales are helping keep the industry's average transaction prices at record levels, too, since many full-size pickups--in particular heavy-duty trucks--carry price tags that approach or even exceed $40,000. The average transaction price for all new vehicles to date this month is $28,921, a May record and 3% higher than May 2012, according to J.D. Power's PIN data. Although May's average price was 19% higher than the average transaction price 6 years ago ($24,404), the average monthly payment for new-car buyers and lessees has only risen 3% during the same time frame ($455 in May 2013 vs. $433 in May 2008).
Factors contributing to the strong industry transaction price performance this year include:
- Low interest rates, which help keep monthly payments down
- The availability of extended-term vehicle loans--72 months or longer--which also helps to reduce monthly payments
- Strong used-vehicle values, which equate to more equity on a buyer's trade-in vehicle
- Strong new-vehicle residual values, which mean lower new-vehicle lease payments
In May, total (retail sales at the dealership and fleet sales to rental agencies and corporations) light-vehicle sales are expected to climb 8% from a year ago to nearly 1.44 million units.
Based on current data, Jeff Schuster, senior vice president of forecasting at LMC Automotive said, "This is the time of year when the automotive industry holds its collective breath as the recent past has dealt with a spring slowdown in demand; however, the current pace suggests full steam ahead for the second half of 2013."
*The percentage of change between May 2013 and May 2012 has been adjusted for one fewer selling day (16 selling days in May 2013 vs. 17 in May 2012).