Goldman Reviews May Auto Sales, Says May Light Vehicle SAAR In Line

Goldman Sachs said May's light vehicle SAAR of 17.4 million was in line with GS/consensus estimates despite weaker results from General Motors Company GM as foreign manufacturers took share.

However, shares of GM and Ford Motor Company F fell 3.42 percent and 2.89 percent Wednesday, respectively, due to the softer preliminary estimates for the month from the Detroit Three.

Fiat Chrysler Automobiles NV FCAU shares also dropped 1.88 percent and Toyota Motor Corp (ADR ) TM closed down 0.08 percent.

Overall vehicle unit sales fell by approx. 100k for the month but grew 2 percent when adjusted for selling days (24 in 2016 vs. 26 in 2015). On a year-to-date basis, this brings absolute vehicles sales to 7.1 million, up 1.2 percent yoy and YTD SAAR grew 2 percent to 17.3 million.

"So while the pace is currently 0.3mn below our full-year forecast of 17.6mn, sales are still tracking up modestly yoy (similar to our forecast of +0.6% US SAAR growth yoy in 2016)," analyst Patrick Archambault wrote in a note.

The analyst said incentives continued to increase, reaching $3,151/unit (+11 percent yoy and up $100/unit sequentially) but only represent 10 percent of ATPs –in line with the historical average.

Archambault noted that Ford light vehicle sales grew 2 percent on F-Series and Transit van strength. However, passenger car sales remained weak across the board, declining 19 percent. This resulted in flat yoy market share of 15.3 percent.

In addition, GM light vehicle sales fell 11 percent from reduced fleet and tight inventory. Both passenger car sales (-19 percent yoy) and light trucks (-7 percent yoy) were worse than the market despite a high level of incentives (+$290/unit yoy to $4,056 and $905 above industry average).

The lower sales were attributed to GM's continued reduction in rental car deliveries (down 22k vehicles yoy according to the company). Together, this drove a 230bps market share decline yoy.

On the flip side, the analyst said FCA sales grew 9.5 percent as light truck dominance continues. May sales remained strong on 23 percent growth in light trucks driven by continued strength in Jeep, Ram, and minivans. However,passenger car sales declined 28 percent. Altogether, FCA market share grew by 90bps yoy.

Most major automakers reported lower total sales for the month of May. GM posted 18 percent drop in sales, while Ford's fell 6 percent and Toyota's sank 10 percent. Volkswagen's dipped 17 percent. However, Fiat Chrysler bucked the trend by posting 1 percent sales growth.

Shares of GM, Ford and Chrysler closed at $30.21, $13.10 and $7.03, respectively.