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On the radar: May motor vehicle sales regain some ground

Total purchases of motor vehicles totaled 12.2 million units (SAAR) in May, more than retracing the decline to 8.7 million units in April after falling sharply to 11.4 million units in March. The level of sales is still well below the 16.8 million units in February before the arrival of the COVID-19 pandemic in the US and the subsequent loss of jobs and restrictions on consumers’ movements.

Sales of all passenger cars were up to 2.653 million units in May after 1.979 million in April. Sales of light trucks – which includes minivans, SUVs, and crossovers – was up to 9.559 million units from 6.746 million in April. Consumers’ preference for vehicles light trucks reached a new peak with 78% of all sales going to units in that that category. Automakers probably heavily discounted all types of motor vehicles in order to move them off lots, especially in advance of the new model year arrivals later this summer. Fresh near-term lows in gasoline prices probably also helped make light trucks more attractive.

It isn’t clear if it was lack of inventory in domestically built vehicles, or if that new foreign built inventory was now available at autodealers that drove some vehicles sales. However, 75% of sales went to North American built cars and trucks, the lowest share of total units sold in nearly 10 years.

In any case, the good news is that the increase in motor vehicle sales will help lift the dollar value of May retail sales when that data is reported at 10:00 ET on Tuesday, June 16. It will also contribute to personal consumption in the data for second quarter GDP when the advance estimate is released on Thursday, July 30 at 8:30 ET.

What is not good news for second quarter GDP is that sales of heavy trucks have hardly budged in recent months and will not make a positive contribution to business investment. In May, the total was 368,000 units of heavy trucks, only slightly higher than the 347,000 in April and below the 382,000 in March.

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