U.S. Vehicle Sales (May 2019)

Sri Thanabalasingam, Economist | 416-413-3117

Date Published: June 4, 2019

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Vehicle sales bounce back in May

  • Following a disappointing April, vehicles sales rebounded in May, increasing by 17.4 million units, comfortably beating market expectations of 16.9 million units.
  • On a month-on-month basis, vehicle sales shot up by 6.2%, the complete opposite of the drop observed in April. On an year-over-year basis, vehicle sales grew by 1.2%, the fastest rise since June 2018.
  • By top-selling auto brands the results were mixed. FCA and Toyota saw sales rise by 2% and 3.2% from a year ago, but Ford (-4.2%), GM (-1.9%), and Honda (-4.9%) all experienced a contraction in sales in May. 

Key Implications

  • Since the beginning of the year, vehicle sales have bounced up and down, exhibiting somewhat of a seesaw pattern. Looking through the volatility, vehicle sales have averaged 16.9 million units, a slight stepdown from the 2018 average of 17.2 million units, but still a respectable level.  
  • Rising interest rates have weighed on auto sales recently, but with interest rates now steadying it may move more consumers back into the market, providing a boost to sales going forward.
  • With the specter of new tariffs on Mexico now on the table and given the tightly integrated nature of the auto industry between the U.S. and Mexico, consumers may pull-forward auto purchases to avoid falling victim to potential tariff impacts. Over the longer run, however, any tariff-induced price increases will add to the challenges faced by the auto sector.