As the market awaits a clear signal that either growing new-vehicle inventories or consumer affordability issues will emerge as the main determinant of auto sales trends in the immediate term, new U.S. light vehicle demand in May is expected to soldier on uneventfully and maintain its unsteady climb.

On the supply side of the equation, supply chain issues have continued the easing that began in the second half of 2022, resulting in consistent increases in retail advertised inventory levels. As we approach the summer months, vehicle listings have plateaued at approximately 2 million units, 67% higher than a year ago, according to S&P Global Mobility's proprietary analysis of advertised dealer inventory. 

"With increased supply comes increased negotiating power for consumers in the market for a new vehicle – as 40% of vehicle listings now reflect a price below MSRP, compared to less than 25% a year ago," said Matt Trommer, associate director of Market Reporting at S&P Global Mobility. "While certain models continue to be difficult to find, savvy consumers are better positioned to find a deal now than they have been since the pandemic."

"Auto sales in May are expected to reflect the ongoing market conditions running in opposition of each other; improving inventory, but uncertain consumers," said Chris Hopson, principal analyst at S&P Global Mobility. "Potential upside to immediate term sales remains as inventory levels progress. However, gathering economic headwinds point to some volatility come the second half of the year."

Sales volumes over the next several months are not expected to dynamically change from the current trend, according to the analysis. That said, consumer choice buoyed by increased inventory and sustained downward pricing pressure could be restrained by affordability challenges by way of macroeconomic uncertainty, rising interest rates, and tighter credit conditions.