Volkswagen Expected to Have 13% Drop in May Sales

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Among the expectations about U.S. cars sales in May is that overall the industry will suffer a drop off of 6.2% to 1,530,000, compared to the same month last year. Also, the diesel engine scandal will shatter Volkswagen sales, which are expected to drop 13.8% to 49,500. The huge manufacturer’s position as a participant in the American market continues to worsen.

According to Kelley Blue Book (KBB):

New-vehicle sales are expected to decrease 6 percent year-over-year to a total of 1.53 million units in May 2016, resulting in an estimated 17.4 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book http://www.kbb.com, the vehicle valuation and information source trusted and relied upon by both consumers and the automotive industry.

Tim Fleming, a KBB analyst, said:

This month’s sales results are set to fall year-over-year with two fewer selling days combined with retail demand that is holding steady, but not growing. While this year may not bring the growth the industry has become accustomed to, it is important to remember that sales are still at record levels and economic factors point to continued strength in the near future.

It is premature to say that the economy and record sales that have put millions of new cars into the garages of Americans have begun to ding the industry. However, both theories have been put forward earlier this year.

The strategy at General Motors Co. (NYSE: GM) to change its business model will cost it in unit sales:

General Motors is expected to report one of the largest sales declines of all major manufacturers in May 2016. GM has been outspoken about its rental reduction strategy, which accounts for much of the drop in volume and will impact sales totals on the company’s high rental units like the Chevrolet Cruze, Impala and Equinox.  GM is keeping the end-game in mind here; by reducing the volume of GM vehicles in rental fleets, the company will eventually see strengthened residual values.

Those residual values may be undercut if the entire industry slows.

The only car company that is expected to do very well in May is Nissan:

Nissan North America could see the greatest gain in market share this month, with perhaps the biggest gain coming from the redesigned Maxima. The bold styling of the Maxima has brought some success since its introduction last year, even though the full-size car segment remains in decline. The similarly styled Murano crossover should have a good month as well, with anticipated growth of roughly 10 percent.

Nissan’s presence in the U.S. market has been eclipsed recently by massive sales of traditional Japanese giants Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC). The success of Subaru also has made Nissan’s strides list impressive. However, with expected May sales of 135,000, Nissan’s results are moving toward the point where they overtake Honda, which is expected to sell 153,000 in May.

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  Sales Volume 1 Market Share 2
Manufacturer May-16 May-15 YOY % May-16
General Motors (Buick, Cadillac, Chevrolet, GMC) 258,000 293,097 -12.0% 16.9%
Ford Motor Company (Ford, Lincoln) 233,000 250,086 -6.8% 15.2%
Toyota Motor Company (Lexus, Scion, Toyota) 223,000 242,579 -8.1% 14.6%
Fiat Chrysler (Chrysler, Dodge, FIAT, Jeep, RAM) 198,000 202,227 -2.1% 12.9%
American Honda (Acura, Honda) 153,000 154,593 -1.0% 10.0%
Nissan North America (Infiniti, Nissan) 135,000 134,779 0.2% 8.8%
Hyundai-Kia 115,000 126,043 -8.8% 7.5%
Subaru of America 50,000 49,561 0.9% 3.3%
Volkswagen Group (Audi, Volkswagen, Porsche) 49,500 57,454 -13.8% 3.2%
Total 3 1,530,000 1,631,234 -6.2%
1 Historical data from OEM sales announcements
2 Kelley Blue Book Automotive Insights
3 Includes brands not shown