New vehicle sales were up in May, driven in part by bigger incentives. Rising incentive spend could hurt used vehicle values by the end of the year. 
 - Photo by Eric Gandarilla. 

New vehicle sales were up in May, driven in part by bigger incentives. Rising incentive spend could hurt used vehicle values by the end of the year. 

Photo by Eric Gandarilla. 

New vehicles sales in May grew by 4.8% on a year-over-year basis in May, according to J.D. Power’s June Used Car and Light Truck Guidelines.

This was a reversal from the 4.8% decline in sales that April experienced. Counting the units sold in May, year-to-date total sales are at 7.02 million units, up 1.2% compared to the same time last year.

As of May 2018, the seasonally adjusted annual rate (SAAR) stands at 16.18 million, which is up slightly from May 2017.

Strong Chevrolet and GMC sales helped General Motors reach 264,000 new-vehicle deliveries in May. Overall year-to-date volume is up 4% for the manufacturer after tallying up May’s results.

Hyundai, Jeep and Mazda also had a strong showing through the month, as unit sales for the respective manufacturers grew 11.5%, 28.8% and 15.1%, respectively.

Incentive spend by manufacturers was also up in May, making last month the 38th month in a row in which incentive spend has grown. The average incentive spend per unit in May 2018 was $3,740, 6.6% more than in May 2017, according to Autodata.

Most of that incentive spend was focused on light truck and SUV vehicles, however, as average passenger car incentive spend declined by 3.8% year-over-year, while light truck and SUV spend was up 12.8%.

While raising incentive spend does help move units at retail, it also has an adverse effect on used vehicle values. J.D. Power notes that one of the biggest factors that could negatively impact used vehicle values at year end will be growing incentives. As of May 2018, incentives appear to be continuing to grow.


Related: New Vehicle Sales to See Big Drop in April: Edmunds

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