New car sales will slow down in May, say analysts

There have been signs and coded warnings for a while now that the sort of month-over-month growth in auto sales we've seen recently won't last forever. Some of the more drastic predictions have been that 2016 will be the year the market reaches "peak auto," and that we'll enter an indeterminate period of time where sales slowly fall off. At least two industry consultants predict that sales will be flat May 2016, according to Automotive News, representing an earlier than expected end to month-over-month sales growth. It might be a sign that "peak auto" might happen earlier this year than previously thought.

Consultants J.D. Power and LMC Automotive both revised forecasts for May 2016 retail sales downward; the former by 100k, the latter by 200k cars and trucks. Some of the volume will be made up by fleet sales and other non-retail means, but it's a sign that retail demand may be flagging. An LMC spokesperson told AN that "While we do not anticipate a retraction in volume over the next 12-18 months, strong year-over-year growth will be difficult to come by."

This comes as incentives have increased by 14 percent, according to AN, which may be another sign of weak demand. Earlier this month, a wave of concern about sales growth this year set off a slide in automaker shares, according to Fortune, representing concern that the flat sales trend would continue.

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