High Demand And More Cars In Stock Create A Big Increase In May Auto Sales

Forecasters expect a substantial increase of around 20% in U.S. auto sales in May, vs. May 2022 — thanks to strong consumer demand and a bigger supply of new vehicles, and despite record-high new-vehicle prices, and rising interest rates.

It’s also important to point out, sales were down sharply in May 2022. Statistically, that exaggerates the increase in May 2023. LMC Automotive said last year that U.S. auto sales fell 29% in May 2022, vs. May 2021.

According to a joint forecast from LMC Automotive and J.D. Power, new-vehicle sales in May 2023 should be around 1.3 million. A separate forecast from Cox Automotive calls for a closely similar number, which rounds up to 1.4 million. Both forecasts are based on new-vehicle shopping data, though the first part of May.

What’s changed from May 2022 to May 2023, is a 48% increase in the supply of new vehicles, to about 1.3 million units, according to LMC and J.D. Power.

What hasn’t changed — at least, hasn’t changed very much — is that despite the increase in supply, the average new-vehicle transaction price is still at a record high for the month.

The average transaction price for May 2023 is an estimated $45,838. That’s a record for the month of May. The thin slice of good news for consumers is that’s an increase of only 0.7% vs. a year ago, so at least the rate of increase is slow.

The average transaction price in May is also down from the all-time highest average transaction price for any month, of $47,362, in December 2022.

The average incentive per new vehicle is up, but still low by historical standards. According to LMC and J.D. Power, the average new-vehicle incentive in May is $1,788. That’s an increase of about 88% vs. a year ago.

As a percentage of the average manufacturer’s suggested retail price, the estimated average incentive in May is 3.7%, vs. 2.1% a year ago.