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Memorial Day Weekend Is Key to May New-Car Sales

Memorial Day Weekend Is Key to May New-Car Sales

By Joseph Dobrian, May 19, 2016

A monthly sales update developed jointly by J.D. Power and auto forecasting partner LMC Automotive indicates that May car sales might rise slightly, compared with May 2015. According to the update, new-vehicle retail sales in May should reach 1,241,200 units, up 1% from a year ago on a selling-day adjusted basis.* Memorial Day weekend is historically one of the strongest sales weekends of the year.

Retail sales through the first 5 months of 2016 are projected to reach 5.6 million units—0.4% higher, on a selling-day adjusted basis, than the same period in 2015. The pace is on track with LMC Automotive and J.D. Power’s full-year projection of 14.3 million units for retail sales—an increase of 1% from last year.

Auto Sales photoThe seasonally adjusted annualized rate (SAAR) for retail sales in May 2016 is projected to reach 14.1 million units, down from 14.4 million units in May 2015. Total light-vehicle sales in May are expected to reach 1,539,500, up 2.2% on a selling-day adjusted basis from 1,632,354 a year ago. The SAAR for total sales is projected at 17.4 million units in May 2016, down from 17.7 million a year ago.

“The Memorial Day weekend is one of the busiest car-buying periods of the year, and we expect it to account for 19% of the month’s retail sales,” said Deirdre Borrego, senior vice president and general manager of automotive data and analytics at J.D. Power. “While month-to-date sales indicate we will see a slight increase compared with May 2015, a key variable is the extent to which manufacturers launch holiday incentive programs. Depending on the value and availability of those programs, there is potential for May sales to exceed expectations.”

While May results will likely see a boost from the Memorial Day sales frenzy, the mid-term outlook is for auto sales to moderate.

“Vehicle-sales growth appears to be flattening out,” observed Jeff Schuster, senior vice president of forecasting at LMC Automotive. “While this is driven by an array of variables, including slow economic growth and stock market volatility, a pattern is emerging sooner than anticipated. While we do not anticipate a retraction in volume over the next 12-18 months, strong year-over-year growth will be difficult to come by.”

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