In May, new light-vehicle sales, including fleet, are forecast to fall to 1,050,000 units, down nearly 33% compared to May 2019, according to Cox Automotive. However, when compared to April sales are expected to rise by roughly 347,000 units, an increase of 49%.
The COVID-19 pandemic is still plaguing the light vehicle market, but May’s sales pace is still expected to be a giant step forward on the path to recovery, Cox Automotive said. The May 2020 forecast of the light-vehicle market includes mid-size cars; compact cars; compact SUV/crossovers; mid-size SUV/crossovers; and full-size pickup trucks.
The seasonally adjusted annual rate (SAAR) in May 2020 is estimated to be 11.4 million, far below last year’s 17.4 million level but a big improvement from the 8.6 million pace seen in the previous month, according to a forecast released by Cox Automotive.
May is normally a critical month for the industry as it kicks off the summer sales season. When sales are reported in early June, analysts will be searching the results for signs of an industry in recovery.
“Recent trends suggest daily sales are showing significant gains over March and April’s collapse. Data reveals the market hit a bottom around the first of April, and since then has been making a slow but steady recovery,” said Charlie Chesbrough, senior economist at Cox Automotive. “The opening of dealerships, and whole states, over the last few weeks is greatly contributing to the upward sales trend. The key question for the market going forward is whether these modest but steady sales gains will continue into June or does the sales recovery stagnate.”
The industry is facing a unique crisis because it is facing a negative demand shock and a negative supply shock simultaneously, Cox reported.
Vehicle factories have been mostly closed since late March and are only beginning to restart, which means new-vehicle inventory is at the lowest volume in more than a year. Low inventory means less choice for consumers, particularly with popular vehicles like pickup trucks and SUVs.
As sales begin to recover, inventory levels will be drawn down even further, quickly causing some brands to face serious shortages.