American data analytics firm JD Power and its partner LMC Automotive forecast the US new vehicle sales to hit a 15.6% year-on-year increase to 1,337,700 units in May.
The report noted that the forecast includes both retail and non-retail transactions, such as fleet sales. Furthermore, May 2023 has a one-selling-day advantage over May 2022 at 25 and 24, respectively. However, the report highlighted that calculating the same sales volume without considering the selling days equates to a 20.4% growth from 2022.
Retail sales forecast
JD Power forecasts the new vehicle retail sales in May to report a 9.6% YoY growth to 1,079,200 units. However, it indicates a 14.2% YoY increase when comparing the years’ sales volume without altering the selling day numbers.
“The industry is positioned for another strong month in May as retail sales are estimated to surge 9.6% from a year ago. This positive performance is complemented by a projected 0.7% increase in average transaction prices. As a result, it is anticipated that consumers will spend nearly $47 billion on the purchase of new vehicles in May, showcasing a significant 13% growth from a year ago.”
Thomas King, Data and analytics division’s President at JD Power
As mentioned, the retail sale’s positive performance is accompanied by a forecasted 0.7% YoY growth in average transaction prices.
In effect, consumers are predicted to expend approximately $47 billion on new vehicles in May, representing a YoY increase of 13%.
Factors affecting the new vehicle sales increase in May
May 2023 sales increased dramatically due to several factors, including availability and dealer inventory. According to the report, retail inventory levels will have increased significantly to 1.3 million units this month compared to a year ago.
However, the vehicle availability improvement caused dealer profits to decrease compared to the same period last year. At the same time, it also led to an increase in automaker incentive spending.
Nonetheless, this month’s results are still very considerably above pre-pandemic levels.
“The total retailer profit per unit — which includes grosses and finance and insurance income — is expected to reach $3,732. While this is 25.8% lower than a year ago, it is still more than double the amount in May 2019.”
Thomas King, Data and analytics division’s President at JD Power
Going back to consumers, it appears that this month’s boost in dealer incentives did little to reduce rising monthly payments for people who finance new vehicle purchases. Still, it may continue to be a good tailwind for buyers.
According to the report, rising prices and interest rates continue to drive higher monthly loan payments.
“The average monthly finance payment in May is on pace to be $736, up $48 from May 2022. That translates to a 7.0% increase in monthly payments from a year ago.”
Thomas King, Data and analytics division’s President at JD Power
The report also noted that the future of electric vehicles is a tiny bit of good news for buyers. EV lease elements of the federal tax credit permit all EVs, irrespective of origin and buyer income level, to qualify, although tax credit eligibility standards have decreased the number of vehicles qualifying for the benefit.
“Accordingly, lease affordability has surpassed purchase affordability in the JD Power EV Index, suggesting that EV lease volumes will surge during the next several months.”
Elizabeth Krear, JD Power EV practice VP
Sales & SAAR Comparison
| U.S. New Vehicle | May 20231, 2 | April 2023 | May 2022 |
| Retail Sales | 1,079,212 units (9.6% higher than May 2022)2 | 1,095,158 units | 945,388 units |
| Total Sales | 1,337,670 units (15.6% higher than May 2022)2 | 1,366,930 units | 1,111,298 units |
| Retail SAAR | 12.0 million units | 13.4 million units | 10.8 million units |
| Total SAAR | 14.8 million units | 16.1 million units | 12.6 million units |
See Also:
- EPA to mandate up to 67% of all new cars sold in the US to be electric by 2032
- EVs contributed a 5.6% share of the US overall car market in 2022, led by Tesla
- Used EV searches surged 145% in February 2023 on Cars.com
- MIT: Computational load for widespread autonomous driving could be a massive driver of global carbon emissions
- US: Tesla led the luxury car segment in 2022
Indeed, these new vehicle sales forecasts in the US are good news for the auto industry. Prospective electric car buyers must also be aware of the “lease hack” to qualify for the $7,500 credit, regardless of the car’s origin and buyer income level.
