by Calculated Risk on 6/03/2025 04:50:00 PM

Wards Auto released their estimate of light vehicle sales for May: U.S. Light-Vehicle Sales Growth Slows in May After March-April “Tariff” Surge (pay site).

Although sales in May dropped to a level more in line with – in fact, slightly below - pre-tariff expectations after spiking above trend in the prior two months due to consumers trying to get ahead of potential tariff-related price increases, part of the cooling off was caused by the drain on inventory from the March-April surge. The drop in inventory, which at the end of last month was down year-over-year for the first time in nearly three years, helped explain a 10% decline in incentive spending in May from April, as there was less pressure to move stock off dealer lots despite the sharp slowdown in demand. That dynamic likely continues not just in June, but into Q3, as most automakers do not currently appear anxious to raise production levels enough to fully replace declining stock levels.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards' estimate for April (red).

Sales in May (15.65 million SAAR) were down 9.4% from April, and down 1.1% from May 2024.

Sales in May were well below the consensus forecast.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

This "beat the tariff" induced surge in buying happened in March and April.  

Now comes the payback ...