Car News

May Car Sales Drop, Automakers Sweeten Incentives

RELATED READING
RESEARCH BY MAKE
Toyota cars, trucks and SUVs Ford cars, trucks and SUVs Honda cars, trucks and SUVs Chevrolet cars, trucks and SUVs Jeep cars, trucks and SUVs Nissan cars, trucks and SUVs Lexus cars, trucks and SUVs Volkswagen cars, trucks and SUVs BMW cars, trucks and SUVs
Acura cars, trucks and SUVs Alfa Romeo cars, trucks and SUVs AMC cars, trucks and SUVs Aston Martin cars, trucks and SUVs Audi cars, trucks and SUVs Bentley cars, trucks and SUVs BMW cars, trucks and SUVs Bugatti cars, trucks and SUVs Buick cars, trucks and SUVs Cadillac cars, trucks and SUVs Chevrolet cars, trucks and SUVs Chrysler cars, trucks and SUVs Daewoo cars, trucks and SUVs Datsun cars, trucks and SUVs DeLorean cars, trucks and SUVs Dodge cars, trucks and SUVs Eagle cars, trucks and SUVs Ferrari cars, trucks and SUVs FIAT cars, trucks and SUVs Fisker cars, trucks and SUVs Ford cars, trucks and SUVs Freightliner cars, trucks and SUVs Genesis cars, trucks and SUVs Geo cars, trucks and SUVs GMC cars, trucks and SUVs Honda cars, trucks and SUVs HUMMER cars, trucks and SUVs Hyundai cars, trucks and SUVs INFINITI cars, trucks and SUVs Isuzu cars, trucks and SUVs Jaguar cars, trucks and SUVs Jeep cars, trucks and SUVs Kia cars, trucks and SUVs Lamborghini cars, trucks and SUVs Land Rover cars, trucks and SUVs Lexus cars, trucks and SUVs Lincoln cars, trucks and SUVs Lotus cars, trucks and SUVs Maserati cars, trucks and SUVs Maybach cars, trucks and SUVs Mazda cars, trucks and SUVs McLaren cars, trucks and SUVs Mercedes-Benz cars, trucks and SUVs Mercury cars, trucks and SUVs MINI cars, trucks and SUVs Mitsubishi cars, trucks and SUVs Nissan cars, trucks and SUVs Oldsmobile cars, trucks and SUVs Plymouth cars, trucks and SUVs Pontiac cars, trucks and SUVs Porsche cars, trucks and SUVs RAM cars, trucks and SUVs Rolls-Royce cars, trucks and SUVs Saab cars, trucks and SUVs Saturn cars, trucks and SUVs Scion cars, trucks and SUVs smart cars, trucks and SUVs SRT cars, trucks and SUVs Subaru cars, trucks and SUVs Suzuki cars, trucks and SUVs Tesla cars, trucks and SUVs Toyota cars, trucks and SUVs Volkswagen cars, trucks and SUVs Volvo cars, trucks and SUVs Yugo cars, trucks and SUVs
RESEARCH BY STYLE
AWD/4WD
Commercial
Convertible
Coupe
Hatchback
Hybrid/Electric
Luxury
Sedan
SUV/Crossover
Truck
Van/Minivan
Wagon

author photo by Michelle Krebs June 2016

May car sales dropped more than some analysts expected, prompting Chevrolet to immediately sweeten its consumer incentives -- and other automakers may follow.

Big Drops

General Motors' 18 percent sales fall caused most of the industry's decline. Its sales drop was three times that of rival Ford's, which came within only 6,000 vehicles of matching GM's sales.

GM immediately announced sweetened Chevrolet incentives, including 0 percent financing for 60 months, beefy cash rebates and loyalty cash. The financing and up to $8,250 in cash is offered with some versions of the Silverado, a model which saw falling sales figures in May; meanwhile, rival model Ford F-150 had a sales hike. No-interest financing for 60 months and a $2,250 cash allowance are now offered for the Equinox, along with lease loyalty cash. Discounts of 20 percent off are on high-end versions of the Impala (amounting to up to $8,025), Sonic and Spark through June 15. Corvette Stingray owners and lessees can receive $2,000 in loyalty cash.

May vehicle sales further demonstrated the expanding schism between cars and sport utilities. Sales of the No. 1 selling vehicle segment -- compact sport utility vehicles such as the Ford Escape, Honda CR-V and Toyota RAV4 -- widened their margin over car sales. A segment adding more new entries -- subcompact utilities, including the Buick Encore, Honda HR-V and Mazda CX-3 -- posted a 36 percent gain. Small-to-large luxury sport utilities also saw healthy sales hikes.

Generally, prospering vehicle categories offer the smallest incentives and the least amount of bargaining room. Conversely, sales of small, medium and large cars of the luxury, nonluxury and performance varieties suffered double-digit sales drops. Hybrid and other alternative energy cars saw the biggest decline -- down 36 percent. Slumping vehicle categories are those in which consumers will enjoy the biggest incentive offers and the most wiggle room for negotiating a price.

Big Incentives

RAM had the biggest May incentives at $5,637 per truck, up $1,600 from April. The Chrysler brand ranked second with nearly $5,000 per car. Looking at luxury brands, Lincoln, Buick and Cadillac increased incentives to about $6,000 per vehicle.

In contrast, Subaru, generally dead last for incentives, further trimmed its deals to $581 per vehicle. Honda and Mazda also cut their already-low incentives.

Inventories of unsold vehicles are also rising. FIAT 500L, 500 and 500X models have the industry's longest stay on dealer lots; the longer they sit, the better the bargains.

In contrast, new models being launched have little inventory and are sold quickly when they arrive at dealerships. Among them are Jaguar's new F-PACE, its first sport utility vehicle, the Chrysler Pacifica minivan that just went on sale, and Cadillac's new CT6 sedan and XT5 SUV. The Honda Pilot sport utility and the freshened Toyota Tacoma midsize pickup truck (another hot segment) are selling fast, as well.

Inventories and, subsequently, incentives have been steadily rising in recent years. Incentives typically grow in the summer months as automakers clear dealer lots for the new fall models. Summer, combined with May's tepid car sales, will likely lead to richer incentives and more bargaining power for consumers.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
May Car Sales Drop, Automakers Sweeten Incentives - Autotrader