New vehicle sales in the U.S. are expected to increase in May, driven by robust demand for personal transportation and better inventory levels at dealerships, a report from industry advisers showed Thursday.
According to a report by JD Power and LMC Automotive, US new car sales, including retail and non-retail transactions, will reach an estimated 1.3 million units in May, up 15.6% from a year earlier.
Prices of new car transactions continue to rise as consumers spent an estimated $46.9 billion on new vehicles in May, 13% more than last year, the report said.
“Despite the challenges posed by increased interest rates and prices, sales volume and transaction prices have shown remarkable resilience, thanks to the combination of improved vehicle availability and catch-up demand,” said Thomas King, president of the data and analytics division of JD Power, in a statement.
Retail inventories are expected to increase by 48% compared to last year. The increase in inventory could hurt dealers’ margins, despite the incentives manufacturers offer to entice customers.
“The main reason for the drop in profits (for dealers) is that fewer vehicles are being sold for prices higher than the manufacturer’s suggested retail price (MSRP),” King said.
Retail sales of new vehicles in May are expected to rise 9.6% on strong demand from buyers who have had to postpone purchases due to low inventory.
Global light duty vehicle sales in that month are expected to increase 12.8% year-on-year, with growth in line with levels in key markets, except in Eastern Europe where sales are expected to grow by nearly 20%. % will rise despite the ongoing war in Ukraine.