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U.S. new car sales to surge in May, dealer profitability remains strong

According to a joint auto sales forecast from J.D. Power and LMC Automotive, total new car sales, including retail and non-retail transactions, are expected to reach 1,337,700 units in May, representing a 15.6% increase from May 2022. When adjusted for the number of selling days, sales volume will increase 20.4% year-over-year.

New-vehicle retail sales for May are anticipated to reach 1,079,200 units, a 9.6% jump from a year ago. When comparing sales volume without adjusting for the number of selling days, the increase from 2022 is 14.2%.

According to the report, retail inventory levels for the month of May are expected to closely match those of April, with approximately 1.3 million units, a 48% increase compared to the same period last year.

The boost in vehicle availability could put a dent in dealer profits as fewer and fewer cars are sold over MSPR. However, the total retailer profit per unit is expected to reach $3,732, more than double the amount seen pre-pandemic. 

Manufacturers have also responded to improving inventory levels by increasing their incentive spending. Despite these adjustments, dealer margins and manufacturer incentive spending have remained relatively stable compared to April.

Thomas King, president of the data and analytics division at J.D. Power, explains further in a statement:

“Despite the challenges posed by elevated interest rates and pricing, sales volume and transaction prices have displayed remarkable resilience, enabled by the combination of improved vehicle availability and pent-up demand. If most interest rate increases have already occurred, consumers can anticipate excluding this factor from future monthly payment increases, potentially sustaining demand.”

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Anna Delvillar
Anna Delvillar
Anna is the editorial and programming coordinator at CBT News. She graduated with a B.A. in English Composition from Georgia State University. She is an enthusiastic and skilled media professional with high-caliber communication skills, and has five years of experience performing multimedia writing, editing, and publishing for automotive, tech, and small business media.

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