TrueCar: Incentives Crucial to May Sales Projections

SANTA MONICA, Calif. — Automakers' continued heavy use of incentives to move new vehicles is what could push May sales higher by double digits from last year. That's the assessment from TrueCar.com in its latest sales forecast and incentive analysis.

The site predicts May light vehicle sales including fleets to come in at 1,050,290 units. Analysts explained that figure represents a 7.0-percent rise from April of this year and a 13.6-percent leap from the industry total recorded in May 2009.

TrueCar.com went on to note that its May forecast translates into a SAAR level of 11.0 million new-vehicle sales.

Significantly aiding the potential sales figures are generous incentives. TrueCar.com found the average incentive package this month is $2,915, a total that's just 1.7 percent higher than the year-ago total. But it's 8.3 percent more than the average OEMs gave in April of this year.

Analysts found that the biggest year-over-year increase among all automakers has been posted by Honda. While a little lower than the industry average, the company's level is at its highest ever at $2,345 per unit; 26.2 percent more than Honda awarded in May of last year.

All told, TrueCar.com expects manufacturers to spend more than $3 billion in various incentive programs in May. The site indicated it's the highest amount since August 2008.

Brands the site thinks could benefit most from the incentive spending include Cadillac, Subaru, Buick and Hyundai. TrueCar.com expects those four nameplates to post the largest increase in sales over last year.

"Despite the recent volatility in the stock market, consumer demand for vehicles continues in May — resulting in the highest selling rate of 2010," explained Jesse Toprak, vice president of industry trends and insight for TrueCar.com.

"Clearly, the high level of incentives is playing a large role in consumers' return to showrooms this month," Toprak continued.

"As we go into the heart of the summer sales season, manufacturers will have to strike a balance between selling a great deal and selling a great car," he went on to say. "A well optimized incentive strategy can easily determine whether a manufacturer is profitable in these volatile times."

TrueCar.com reiterated that its forecast and analysis are based on transaction data and refined by other current and historical factors that impact vehicle sales, including sales, inventory, incentives, fuel prices and major macroeconomic data.