Hyundai, Kia post double-digit gains in May

U.S. sales rose for the 10th-straight month in May at Hyundai and Kia, helped by rising inventory and incentives and sharply higher fleet deliveries.

Hyundai deliveries jumped 18 percent to 70,001, with retail volume rising 8 percent to 64,070. The company said it delivered 5,931 vehicles to fleet customers, or 8.5 percent of total May sales.

Hyundai ended May with 47,671 light vehicles in U.S. inventory, down slightly from 49,045 at April's close but more than double the 18,641 units in stock in May 2022.

Kia, still hampered by one of the industry's lowest stockpiles, reported U.S. sales of 71,497, a jump of 23 percent and the company's second-best month ever. Four of the brand's core models -- Soul, Seltos, Telluride and Carnival -- posted big gains.

“More than two out of every three Kia vehicles sold in the U.S. today is a utility vehicle," said Eric Watson, vice president of  sales operations for Kia America. "In combination with our growing lineup of advanced electrified offerings, we have strong tailwinds to push our business forward for the remainder of the year.”

TrueCar estimated fleet sales rose 92 percent at Kia last month compared with May 2022.

Genesis set a May record with sales of 5,605, an increase of 27 percent, with the luxury brand's two crossovers, the GV70 and GV80, and electrified variants of the G80 and GV70, driving most of the month's gain. Genesis sales have now advanced seven consecutive months.

Toyota Motor Corp., Honda Motor Co., Subaru and Mazda will release May results later Thursday, followed by Ford Motor Co. and Volvo on Friday.

Most of the rest of the industry reports U.S. sales at the close of each quarter.

U.S. light-vehicle sales were expected to rise 18 to 20 percent in May, according to forecasts from J.D. Power, LMC Automotive, TrueCar, Cox Automotive and S&P Global Mobility.

The projected sharp rebound from 2022's weakest month was driven by consumers returning to showrooms as selection improved and incentives rise, as well as continued strong fleet demand as automakers filled a backlog of orders from daily rental companies and commercial users. J.D. Power and LMC Automotive estimated fleet sales increased 50 percent in May from a year earlier.

The seasonally adjusted, annualized rate of sales in May was forecast to come in at 14.5 million to 14.9 million vehicles, down from April's 16.15 million rate but up sharply from 12.73 million in the previous May, which marked 2022's slowest sales pace.

Retail inventory stood at 1.3 million in May, up 48 percent from May 2022, J.D. Power and LMC Automotive forecast. Toyota, Kia, Honda, Lexus, BMW, Subaru, Land Rover, Hyundai, Cadillac and Nissan had the industry's leanest stockpiles last month, Cox Automotive said, while Jeep, Infiniti, Jaguar, Buick, Ram, Chrysler, Dodge, Mini, Lincoln and Audi had the highest inventory levels.

Discounts continue to rise broadly across the industry as inventories rebound and automakers move to alleviate the higher costs of borrowing amid increased interest rates. TrueCar estimated incentives averaged $1,931 last month, up 64 percent from May 2022 and 13 percent from April. Toyota, still hampered by lean stockpiles, was the only automaker with incentives under $1,000 last month, TrueCar estimated. Three automakers — Stellantis, Daimler and BMW — saw discounts climb above $3,000 last month, TrueCar estimated, while average incentives at General Motors, Ford and Volkswagen Group rose above $2,000.

Chevrolet offered 1.9 percent financing on select crossovers and SUVs for qualified buyers who financed through GM Financial, with payments waived for 90 days. Some Stellantis dealers are offering as much as $12,000 off a Jeep Grand Wagoneer.

J.D. Power and LMC Automotive said discounts on leased vehicles have risen significantly in recent months, with leasing expected to account for 21 percent of retail sales in May, up significantly from a low of 16 percent in September but still below May 2019, when leased vehicles made up nearly 30 percent of all new-vehicle retail sales.

• There were 25 selling days last month, one more than in May 2022.
• The average incentive per new light truck was expected to be $1,698, up 74 percent, or $721, from May 2022, J.D. Power and LMC Automotive said, while the average spending on cars was expected to be $1,421, up 66 percent, or $567, from a year earlier.
• Average new-vehicle retail transaction prices remained elevated in May, rising an estimated 0.7 percent to $45,838 from a year earlier, J.D. Power and LMC Automotive forecast, but continuing to slide from the record high of $47,362 set in December.
• The average interest rate on new vehicles was 7.1 percent in May, slightly higher than in April, TrueCar estimated, and the average loan term for a new vehicle was about 69 months.

"With increased supply comes increased negotiating power for consumers in the market for a new vehicle — as 40 percent of vehicle listings now reflect a price below MSRP, compared to less than 25 percent a year ago. While certain models continue to be difficult to find, savvy consumers are better positioned to find a deal now than they have been since the pandemic."

— Matt Trommer, associate director of market reporting at S&P Global Mobility

"New-vehicle prices appear as if they are starting to weaken. The average new-vehicle listing price is around 5 percent above last year, but the rate of growth has weakened in recent weeks. It may reflect more discounting offered across the industry. This could increase over the summer."
— Charlie Chesbrough, senior economist at Cox Automotive