Total sales of motor vehicles in May rose to 17.3 million units (SAAR) in May after falling to 16.3 million units in April. Sales have been off to a slower and more uneven start in 2019, but it looks like the return of elevated consumer confidence and a strong labor market have encouraged consumers to purchase vehicles.
Total sales of passenger cars rose to 4.777 million units in May from 14.742 million in April. Sales of all light trucks — a category that includes SUVs, minivans, and crossovers — was up to 12.530 million units in May, its highest level since 12.589 in July 2005. Fourteen years ago gasoline prices were close to $2 per gallon, a level that make owning a less fuel efficient vehicle more attractive. At present, the cost per gallon of regular gasoline is slightly below the $3 per gallon mark, a level at which consumers will take a closer look at passenger cars as more economical to own and operate. However, with a solid labor market and rising incomes, and the enduring popularity of models in the light trucks category, the share of passenger cars versus light trucks has less to do with considerations in cost of ownership than in the past.
The share of domestically produced motor vehicles — which directly contributes to growth in the US economy’s manufacturing sector — has remained little changed for some time. The percentage has been around 76%-78% for the past year and has remained at 78% for the past three months. It isn’t clear that last spring’s tariffs drove more than a marginal share of production back to the US, or if there has been any impact from the latest threats to impose higher tariffs.
In any case, a nice uptick in overall motor vehicle sales generally — and pricier light trucks in particular — will help add to the dollar value of retail sales in the May report when it is released at 8:30 ET on Friday, June 14.
Sales of heavy trucks do not contribute to consumer sales, but two strong months in April and May will suggest that businesses are investing in capital equipment to support business activity in the second quarter.
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