The U.S. light-vehicle market doesn’t appear to be in the best health. While many automakers now opt against issuing monthly sales reports, those that still do are posting some pretty brutal numbers.
This does not bode well for an industry that seemed pretty certain that 2022 would be its recovery year. However, it is on-brand with the slew of announcements made by manufacturers warning about supply constraints and an inability to manufacture at scale. There has also been a growing sense that some consumers may be shunning vehicles that have spent the last several months trading well above what seems rational. Wholesale pricing actually declined by roughly 6 percent since the January record. Though you may not see that represented on dealer lots or even have noticed if it was because last month still saw transactions averaging 14 percent higher than they were last year.
As for sales volume, most automakers were posting double-digit declines for the month of May. Overall, the seasonally adjusted, annualized rate of sales (SAAR) for May fell dropped to a crippling low of 12.81 million, according to Motor Intelligence. That’s to be contrasted against April’s 14.6 million units and over 17 million average from May of 2021.
Automotive News issued a breakdown between the individual brands, noting that the problem appeared to be worse among Asian brands. It also said it didn’t expect the coming months to be much better, as the industry is now staring down the barrel of commodity shortages, sustained inflation, and supply chain problems. On Thursday, LMC Automotive lowered its outlook for U.S. sales this year, knocking off 300,000 would-be vehicles for an even 15 million units.
“The market faces a real risk of turning negative from 2021,” Jeff Schuster, head of global vehicle forecasts at LMC Automotive, stated. “We still have a lift in sales in the second half but it is plausible that an increase will not materialize this year and we could continue to track in the 14 million to 15 million unit selling rate for the remainder of the year.”
May volume fell 4.4 percent to 153,434 at Ford Motor Co. and by double digits again at Toyota Motor Corp., Hyundai and Kia as choked supply chains continue to batter automakers, leaving showrooms and lots nearly bare of new cars and light trucks.
Deliveries in May declined 4.3 percent at the Ford brand, the fourth straight monthly decline, with mixed results for the division’s biggest sellers: F-series, up 6.9 percent; Ranger, down 58 percent; Explorer, up 19 percent; Escape, down 55 percent, and Bronco Sport, down 36 percent. Lincoln volume dropped 6.8 percent in May, its 12th consecutive decline.
Ford said nearly 50 percent of its retail sales last month came from previously placed orders.
Toyota, with one of the industry’s leanest stockpiles of new cars and light trucks, said volume skidded 27 percent to 175,990 last month, with deliveries off 27 percent at the Toyota division and Lexus. It was the tenth straight monthly decline for the Toyota brand and fourth consecutive drop at Lexus.
Honda fared even worse as deliveries slumped 57 percent to 75,491 deliveries in May. This was attributed to the brand’s best sellers ironically not selling all that well. Accord was down 58 percent, the CR-V was off by 59 percent, and the Civic was short a massive 77 percent against last year’s metrics. The reason is now all-too-familiar. The company said it couldn’t get enough parts and had to pause production, leading to extremely lean inventories in the United States.
“We are experiencing record turn rates of more than 80 percent for the Honda brand, with nearly every unit a dealer touches in a month already sold,” a Honda spokesperson. “More than half of our Civics and CR-Vs are sold before they ever even reach a dealer’s lot. Our sales numbers do not reflect the true demand for our products.”
It was a similar story for Mazda, Hyundai, Kia, and Volvo. They all endured similar sales declines in May and faulted the poor state of the industry as the primary cause. Though that’s little comfort considering this is usually the time you see a serious uptick in vehicle sales.
“Historically, the daily sales pace is higher in May than in most other months, with spring optimism in the air, thoughts of summer road trips on the horizon and the buzz of Memorial Day sales,” Charlie Chesbrough, senior economist at Cox Automotive, told Automotive News. “But many of the industry’s normal patterns have been overturned by tight inventory and the lingering effect of the global pandemic.”
The global semiconductor shortage is assumed to continue stifling automotive production for the foreseeable future. Meanwhile, China’s stringent “zero-COVID policy” has effectively crippled the supply lines of many companies that would like to sell things to people living in North America. No matter how you parse through the data, it doesn’t inspire much confidence that the next few months will be any better than the last batch.
[Image: Gretchen Gunda Enger/Shutterstock]
Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.