Will May Auto Sales Cool Full Year Estimates?

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Maybe the analysts and others tracking the auto industry were getting ahead of themselves.

Maybe those who were reluctant to raise their full-year sales forecasts were right.

Any way you look at it, there are a lot of people who are rethinking their optimism about auto sales this year.

Nobody is expecting sales to slow down dramatically, but there is growing chatter that the full year sales rate is less likely to rise as high as many were predicting just a few months ago. Blame it on signs of an economy losing what little steam it has had and the impact that will have on consumer confidence.

The May sales rate of 13.8 million vehiclesis well below the estimate of 14.4 million. It’s also the lowest monthly sales rate this year. Roughly speaking, it is in-line with the pace the industry set in the fourth quarter. That’s not bad, but it’s certainly not what many were predicting when sales soared in January and February.

Most in the industry still believe annual auto sales this year will wind up between 14.0 and 14.5 million. What has changed, or likely will change in the near future, is the talk of annual sales hitting 15 million. Could it still happen? Yes. Is it likely? I don’t think so. Those predictions of a 15 million sales rate were often predicated assuming a couple of things: strong consumer confidence and a steady, substantial improvement in the economy.

After two months of lackluster gains in jobs and with consumer confidence flagging, it’s looking like we are headed for a summer of inconsistent economic data. That inconsistency could weigh on consumer confidence and as any auto executive will tell you, when consumer confidence stalls it’s tougher to sell a new car or truck.

I could be wrong. In fact, I hope I’m wrong. But something tells me we’re in for a few volatile months of auto sales.

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