Cox Automotive forecasts improved May new-vehicle sales driven by increased inventory/incentives

Cox Automotive anticipates a positive trend in May’s new-vehicle sales compared to last year, buoyed by significantly higher inventory levels leading to more attractive incentives. 

However, despite this optimism, challenges in vehicle affordability persist. These are influenced by factors like elevated new-vehicle prices and high interest rates, contributing to monthly loan payments exceeding $750 on average.

The forecast indicates that the new-vehicle Seasonally Adjusted Annual Rate (SAAR) for May will surpass last year’s 15.5 million level and slightly exceed last month’s 15.7 million pace, indicating a 3.5% increase in sales volume compared to the previous year and a 6.4% rise over the prior month. May boasts 26 selling days, one more than both last year and last month.

As of the beginning of May, new-vehicle inventory stands at 2.84 million units, marking a remarkable 51% surge from the previous year and reaching its highest point since late 2020. However, despite this surge in inventory, prices have remained relatively stable compared to the same period in 2023. Concurrently, incentives have nearly doubled from a year ago, indicating aggressive promotional efforts by manufacturers.

Charlie Chesbrough, Senior Economist at Cox Automotive, highlighted the seasonal uptick in sales during May, “driven by improved weather conditions drawing more shoppers to dealer lots.” Additionally, Memorial Day weekend typically sees manufacturers offering low-price promotions to bolster sales momentum for the summer season. Given the ample inventory levels across several brands, shoppers can expect to encounter a plethora of competitive offers this year.