New car sales slow in May, down 6.5% for credit unions

Automotive showroom. (Source package: Shutterstock)

Cox Automotive predicts that May new car sales will be strong at the end of the month during the Memorial Day holiday, but not as strong as April’s excellent performance.

But the share of sales that will show up in the form of loans on credit union balance sheets is uncertain. CUNA mutual group Credit Union Trends Report released Thursday showed that credit unions held $ 137.6 billion in new auto loans as of March 31, down 6.5% from the previous year. Used car loans increased 4.8% to $ 244.1 billion.

An Experian report released on May 20 showed that credit unions were responsible for 20% of the number of loans in the three months ending March 31, compared to 20.8% for 2020 as a whole. , 21.9% in 2019 and a peak of 24.5% in 2018. Banks, captives and other lenders increased their share of 2020 in the first quarter.

Cox Automotive said on Wednesday that dealers will sell 1.54 million new cars in May, which translates to a seasonally adjusted annual rate (SAAR) of 16.5 million vehicles.

This is an improvement from 12.1 million SAARs in May 2020, when many showrooms were closed by the COVID-19 pandemic, but it is down about 11% from the 18, April 5 million robust SAAR.

Charlie Chesbrough, senior economist at Cox Automotive, said a better measure for judging the market downturn was the 17.3 million SAARs of May 2019.

“Supply is over 40% lower than last year’s levels, and many dealerships have low inventory on hand,” Chesbrough said. “Memorial Day weekend is historically one of the best-selling times of the year. What is historic now is the exceptionally low inventory. “

The data analytics firm in Irvine, Calif., Expects the tight inventory situation to continue through the summer and possibly into the remainder of 2021. Production shutdowns during the crisis initial outbreak of COVID last year and various supply chain disruptions, including the global shortage of computer chips, have left the industry with too few vehicles.

Dealerships have about 42% fewer vehicles in their showrooms this month than a year ago.

The shortage of supply means buyers will likely pay more if they find a suitable vehicle. Transaction prices are high in large part due to a more expensive product assortment of high-tech crossovers and SUVs. Incentives to sell are also low and declining in 2021.

Given the low supply and high demand in the market today, buyers will find less “good deals” this Memorial Day weekend. Fortunately, according to a recent study by Kelley Blue Book, the majority of shoppers don’t expect traditional offers this holiday weekend. In fact, many of them are planning and willing to pay the sticker price for a new vehicle.

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