June 3, 2021 Reading Time: 2 minutes

Sales of light vehicles totaled 17.0 million at an annual rate in May, down from the 18.8 million pace in April and right in the middle of the 16-to-18 million range that has been in place for much of the last two decades. Unit sales plunged in March and April 2020 to 11.4 million and 8.7 million annual rates, respectively (see chart). The pace of sales in April 2020 was the lowest on record since this data series began in 1976 and follows a run of 72 months in the 16 to 18 million range from March 2014 through February 2020. Recent strength is a positive sign for consumer spending. However, a chip shortage has disrupted production for many manufacturers. That shortage is showing some signs of easing, but it may take some time for conditions to return to normal. In the meantime, sales, inventories, and prices may be distorted.

Breaking down sales by origin of assembly, sales of domestic vehicles fell to 12.6 million units versus 14.1 million in April, a drop of 10.3 percent, while imports fell to 4.4 million versus 4.7 million in April, a drop of 7.0 percent. The domestic share came in at 74.3 percent in May versus 74.9 in April, the fifth decline in a row and the lowest since June 2020.

Breaking down by size of vehicle, May light-truck sales totaled 13.0 million at an annual rate versus a 14.6 million rate in April, a decline of 10.4 percent. Car sales were 4.0 million at an annual rate versus 4.2 million in April, a decrease of 6.4 percent (see chart). The light-truck share stood at 76.7 percent for May, completely dominating the car share of 23.3 percent. The dominant share of light-trucks continues a long-term trend. As recently as February 2013, the split between cars and light-trucks (SUVs and pick-up trucks) was about even, with both segments selling about 7.8 million at an annual rate.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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