May U.S. car sales are expected to fall compared to the same period a year ago. It is another sign that the new car sector, which has been so healthy for so many years, has entered a period of decline. Among the major manufacturers that sell cars and light trucks in the United States, Ford Motor Co.’s (NYSE: F) sales are expected to fall the most, another signal of its deepening troubles.
Cox Automotive forecasts that total vehicle sales will drop 3.2% in May to 1,543,000. Its management “expects the vehicle market to return to a modest sales pace in May and continue on a path that ends with total sales of 16.8 million units in 2019, below last year’s total of 17.3 million.” Its researchers also reported that May is one of three key months per year for car sales. The numbers are still a great contrast to the 10.4 million vehicles sold in 2009.
Since the Great Recession, car sales have swung higher on consumer confidence and a sharp rise in employment. The jobless rate was 3.9% in April, the lowest level since December 1969. While most measures of consumer activity have stayed solid, worries about the effects of the trade war with China have entered many economic models. This has triggered more anxiety about car sales in the second half of the year.
Ford’s sales are expected to drop by 8.5% in May to 221,000. That is the largest percentage drop in May, based on the Cox forecast. General Motors Co. (NYSE: GM) sales are expected to decline by 1.1% to 262,000. Toyota Motor Corp.’s (NYSE: TM) sales are forecast to fall by 4.8% to 205,000. Fiat Chrysler Automobile N.V.’s (NYSE: FCAU) are expected to retreat by 6.7% to 200,000.
The only car company that is expected to have a meaningful increase is Subaru, which is forecast to rise 3.1% year over year to 62,000. Subaru continues a long string of positive monthly sales growth.
The forecast has two red flags. One is that the industry overall has started to falter. The other is that the turnaround of Ford is not happening.