China Automobile Dealers Association: US auto market bounced in May 2020

“America’s auto dealers are getting people back to work,” NADA President Rhett Ricart said May 14 in a video message to dealers, employees and customers. “We are leading the way in safely reopening our doors and helping to effectively restart the American economy.”

On June 5, according to analysis and reports by NADA Chief Economist Patrick Manzi, U.S. new light vehicle sales in May showed signs of recovery, with a SAAR of 12.21 million units. Although down 29.8% from May 2019, it was a significant improvement from the 47.9% decline in the previous month. April seemed to be the bottom of the sluggish new car sales, but sales improved throughout May as many state and local governments relaxed or ended their home quarantine policies. After surpassing the entire car segment for the first time in April, pickup trucks remained popular in May, but they performed poorly in the car segment. The entire light truck market (crossovers, pickups and SUVs) remained strong in May, accounting for a record 77.2% of total sales. So far in 2020, light trucks account for three-quarters of new car sales.

Many customers took advantage of an almost historic level of manufacturer-offered incentives, including generous loan terms with zero-per-cent financing for up to 84 months. This level of incentive spending is expected to ease in the coming months as automaker production shutdowns during the COVID-19 pandemic reduce dealer inventories. These inventory shortages, particularly in the popular pickup truck and SUV segments, are expected to be more pronounced in parts of the country with looser quarantine restrictions. Inventory levels are expected to be down about 30% at the end of May compared with the same period last year, which could also limit sales in June, according to Wards Intelligence forecasts. It will take time to restore inventory levels as most auto plants are only just beginning to restart production, and inventories of popular vehicles are expected to be limited until late summer.

Key account sales have been hit harder than retail sales, as large rental companies have significantly reduced or canceled key account orders. Retail sales accounted for 87% of sales in April and 90% of sales in May, significantly higher than the 2019 average of nearly 80%, according to Wards Intelligence. Key account sales will be hit harder than retail sales in 2019. Total new light vehicle sales are expected to be between 13 million and 13.5 million units in 2020.