S&P Global Mobility: May U.S. auto sales to progress mildly

Rhea-AI Summary

S&P Global Mobility forecasts U.S. light vehicle sales to reach 1.4 million units in May 2024, marking a 3% increase year-over-year and a 7% rise from April 2024. This translates to a seasonally adjusted annual rate (SAAR) of 15.6 million units. Despite these gains, the market lacks sustained momentum due to high vehicle prices and interest rates. Inventory levels, particularly for electric vehicles (EVs), are growing but at a slower rate. May's BEV share is projected at 7.6%, with future increases dependent on new model rollouts. Analysts warn of potential downside risks for the rest of 2024.

Positive

• May 2024 vehicle sales estimated at 1.4 million units, up 3% year-over-year.
• 7% increase in sales from April 2024.
• Seasonally adjusted annual rate (SAAR) of 15.6 million units.
• EV inventory growing faster than the overall industry; BEV share expected to increase.
• Continued development and rollout of new BEV models, including Chevrolet Equinox EV and Honda Prologue.

Negative

• Market lacks sustained momentum due to high vehicle prices and interest rates.
• Three-month moving average for SAAR has been flat since Q3 2023.
• Potential downside risks to sales volumes for the rest of 2024.
• Rate of inventory increase is the lowest since July 2023.

Insights

Financial Analyst

The projected mild increase in May U.S. auto sales indicates a modest uptick in the automotive market amidst existing challenges. With an estimated volume of 1.4 million units, up 3 from last year and 7 from April 2024, the data suggests a slight recovery. However, the market's lack of sustained momentum raises some concerns.

Key indicators such as the Seasonally Adjusted Annual Rate (SAAR) remaining at 15.6 million units highlight ongoing market stability. However, with the SAAR trending sideways since Q3 2023, it reflects a stagnation rather than robust growth. This is reinforced by the pressure from high vehicle prices and interest rates, limiting consumer affordability and potentially capping further sales growth.

The constant increase in inventory, notably the 57 year-over-year rise in retail advertised inventory, indicates manufacturers are ramping up production. This could lead to higher incentives to drive sales, impacting profit margins in the near term. Investors should monitor how these incentives affect profitability and whether increased production translates into actual sales growth.

Market Research Analyst

The automotive market's dynamics are influenced heavily by consumer affordability and inventory levels. The 57 increase in advertised inventory over the last year, particularly in electric vehicles (EVs), is noteworthy. The growing EV inventory points to manufacturers' commitment to this segment, anticipating future demand shifts despite current affordability constraints.

Electric vehicles capturing a 7.6 market share in May, consistent with previous months, indicates a stable yet slow expansion. The upcoming rollouts of new EV models such as the Chevrolet Equinox EV and Fiat 500e suggest potential growth in this segment. However, the market's ability to absorb this increased inventory amid economic headwinds remains uncertain.

For investors, the short-term volatility expected in monthly BEV shares requires attention. The introduction of new models could drive interest and sales, but economic pressures may temper these gains. Long-term, steady growth in the EV segment aligns with broader industry trends towards sustainability.

On estimated volume of 1.4 million units, May new vehicle sales are expected to be up moderately from both the year-ago and month-prior result, but market seems devoid of any sustained momentum.

SOUTHFIELD, Mich., May 29, 2024 /PRNewswire/ -- S&P Global Mobility projects new U.S. light vehicle sales volume in May 2024 to reach 1.4 million units.  This unadjusted volume total would be up approximately 3% from the year-ago total, and up 7% from the April 2024 result. The estimated May sales total would translate to a sales pace of 15.6 million units (seasonally adjusted annual rate: SAAR).  When viewed on a three-month moving average basis, the month SAAR metric has been trending sideways since the third quarter of 2023.

Light vehicle production volume continues to churn, hinting at sustained growth for inventories and incentives

"Given the auto consumer affordability headwinds of vehicle prices remaining high, mixed with high interest rates, there's been limited momentum in regard to the pace of auto sales levels over the past three quarters," said Chris Hopson, principal analyst at S&P Global Mobility. "While incentives and inventory levels, two potential forces to combat some of the new vehicle affordability concerns, have continued to develop over the same time frame, a potentially constrained consumer continues to dictate monthly sales levels, with downside risks to rest of year sales volumes beginning to emerge."

Light vehicle production volume continues to churn, hinting at sustained growth for inventories and incentives moving through the rest of 2024, although like sales, growth levels for inventories are settling also.  According to Matt Trommer, associate director, S&P Global Mobility, "Analysis of April retail advertised inventory data in the U.S. finds that inventory is still on the rise, with electric vehicle (EV) inventory growing faster than the overall industry. Available retail advertised inventory at the end of April rose to 2.77 million vehicles, up 1.3% compared to March and 57% over last April. This is the 11th consecutive month of increases (22 of the last 24 months have grown vs. the prior month), but the rate of increase is the lowest since July 2023."  

U.S. Light Vehicle Sales
		May 24 (Est)	Apr 24	May 23
Total Light Vehicle	Units, NSA	1,402,000	1,313,512	1,363,818
	In millions, SAAR	15.6	15.7	15.5
Light Truck	In millions, SAAR	12.6	12.7	12.3
Passenger Car	In millions, SAAR	3.0	3.0	3.2
Source: S&P Global Mobility (Est), U.S. Bureau of Economic Analysis

Continued development of battery-electric vehicle (BEV) sales remains an assumption in the longer term S&P Global Mobility light vehicle sales forecast.  In the immediate term, some month-to-month volatility is anticipated. May BEV share is expected to reach 7.6%, similar to the month prior reading and an advancement from the Q1 2024 results. BEV share is expected to advance over the next several periods though, pending the roll outs of vehicles such as the Chevrolet Equinox EV, Honda Prologue and Fiat 500e, all scheduled for roll outs over the next few months, followed by new BEVs such as the Jeep Wagoneer S and Volkswagen ID. Buzz slated for release in the second half of 2024.

About S&P Global Mobility

At S&P Global Mobility, we provide invaluable insights derived from unmatched automotive data, enabling our customers to anticipate change and make decisions with conviction. Our expertise helps them to optimize their businesses, reach the right consumers, and shape the future of mobility. We open the door to automotive innovation, revealing the buying patterns of today and helping customers plan for the emerging technologies of tomorrow.

S&P Global Mobility is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity, and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information, visit www.spglobal.com/mobility.

Media Contact:

Michelle Culver
S&P Global Mobility
248.728.7496 or 248.342.6211
Michelle.culver@spglobal.com

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SOURCE S&P Global Mobility

FAQ

What is the projected U.S. light vehicle sales volume for May 2024?

S&P Global Mobility projects the U.S. light vehicle sales volume for May 2024 to be 1.4 million units.

How does May 2024's vehicle sales compare to April 2024?

May 2024's vehicle sales are expected to be up 7% compared to April 2024.

What is the seasonally adjusted annual rate (SAAR) for May 2024?

The SAAR for May 2024 is projected to be 15.6 million units.

Are there any signs of growth in vehicle inventories?

Yes, vehicle inventories are growing, particularly for electric vehicles, but the rate of increase has slowed.

What is the projected BEV share for May 2024?

The BEV share for May 2024 is projected to be 7.6%.

What risks are associated with the U.S. auto sales forecast for the rest of 2024?

Analysts warn of potential downside risks due to high vehicle prices and interest rates impacting consumer affordability.

What new BEV models are expected to roll out in the near term?

New BEV models such as the Chevrolet Equinox EV, Honda Prologue, and Fiat 500e are expected to roll out soon, followed by Jeep Wagoneer S and Volkswagen ID. Buzz in the second half of 2024.