Auto sales recovery is real, record sales expected for the third straight month
The current boom in US auto sales doesn’t need an asterisk – it’s the real deal. Experts said auto sales have increased in absolute terms, and not just a statistic trick, compared to poor sales a year ago due to COVID-19.
Excluding sales to rental, government and commercial fleets, May retail sales of U.S. automobiles will be higher than ever for May and the third straight month of record retail sales, according to a joint forecast from JD Power previously expected and LMC Automotive.
The forecast is for retail sales of around 1.4 million in May. That would be the highest May retail sales in 10 years, the forecasting and advisory firms said. Total sales, including fleet sales, are estimated at around 1.6 million.
That would be an increase of almost 40% compared to May 2020, when many car dealerships were still closed due to the pandemic. But the significant thing is that the latest results have been high in every way, not just based on a simple comparison a year ago.
There are several factors driving the strong customer demand, said Tom Libby, associate director, Automotive Loyalty and Industry Analysis at IHS Markit, in a phone interview. He said auto sales hit a record 1.6 million in March.
“Several things contribute to this,” he says. “There is a backlog of people who have waited until COVID is over or maybe over, so to speak.”
In addition, the interest rates are low. That makes auto loans more affordable for customers and makes it more affordable for automakers to offer incentives in the form of soft loans, Libby said.
US households can also spend money. “Money goes into various forms of federal government support,” he said.
A low number of new cars continues to limit car sales, otherwise sales would likely be even higher, forecasters said.