New-vehicle sales when announced next week by many automakers are expected to show sizeable gains over last year but have also declined compared to last month.  

The seasonally adjusted sales rate (SAAR), is expected to finish near 14.9 million in May, a notable drop from April’s surprisingly strong 15.9 million level, according to Cox Automotive’s analysis of vAuto Available Inventory data released May 25.

Affordability issues, driven in part by high interest rates and elevated new-vehicle prices, continue to dampen sales, as typical monthly payments for new-vehicle loans are well above $700 in today’s market.

Compared to a year ago, the forecast for May reveals a significantly changed market. Sales volume is forecast to jump more than 20% year-over-year, thanks to far better inventory levels.  

A year ago, total new-vehicle inventory at retail outlets across the U.S. stood at about 1.1 million units. 

This year, heading into May, inventory was at a two-year high and above 1.9 million units, an increase of nearly 70%.  

Tight inventory was the key driver of lower sales in 2022. This year, as inventory builds for many brands, demand, not supply, is becoming the market driver. 

“New-vehicle sales will show strong gains this month over last year’s levels, and on the surface, this is a bit surprising,” said Cox Automotive senior economist Charlie Chesbrough in a news release. “Interest rates are substantially higher than a year ago, as are vehicle prices, and yet sales will increase year-over-year. The reason? Vehicle shoppers now have a much better chance of finding something that fits their needs. Pent-up demand, held back by limited product availability last year, is now being fulfilled as inventory levels improve around the country.”   

Some slowdown in the second half of this year is expected due to economic headwinds that have not subsided. More incentives and more fleet volume will continue to support overall sales volume.  

Anchored by Memorial Day weekend, May is traditionally one of the stronger months in any given year for new-vehicle sales. In May 2023, there are 25 selling days, one fewer than last month. And while sales volume of 1.35 million is a notable gain over last year, May sales volume averaged 1.57 million units from 2015 to 2019.