PREVIEW: May U.S. Auto Sales

Automakers will be releasing their sales figures for the month of May tomorrow, and investors should expect above-average volatility in the automotive industry. Forecasts call for a seasonally adjusted selling rate of 17.3 million vehicles within the United States, which would mark the highest sales since August of last year. If the forecast is correct, sales would be down just 1 percent from last May, even though there was one fewer selling day this year. May sales are projected to be up 10 percent from April. We talked with Karl Brauer, Senior Editor at Kelley Blue Book, and Michelle Krebs, Senior Analyst at Autotrader, to get their thoughts in advance of tomorrow's reports. They both expect sales to be relatively flat year-over-year, with some companies probably regressing slightly from May 2014's strong figures. In particular, Brauer says Ford will likely see a larger decline than most. He thinks Chrysler, on the other hand, which has increased sales YoY in each month this year, will likely continue that trend. In general, however, Brauer predicts that the market will be relatively stable tomorrow. Krebs mentioned that SUVs and trucks continue to be hot sellers this year. Car sales, however, are expected to drop about 5 percent according to her estimates. Since large utility vehicles cost more on average than sedans and coupes, Brauer says that manufacturers that specialize in larger vehicles will see especially large margins and high average transaction prices—a metric used by many analysts. In his words, this could make companies like Ford and GM look better than Honda and Volkswagen, which specialize in smaller vehicles. Nevertheless, on balance May is expected to be reported as a strong month for automakers. This article was written by Ali Hakim