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US auto sales set to modestly rise in May, report shows

FILE PHOTO: A view of cars on the road during rush hour in San Francisco

(Reuters) - New vehicle sales in the United States are projected to rise in May from a year earlier, helped by demand for crossover SUVs and pickup trucks, according to a joint report by industry consultants J.D. Power and GlobalData on Thursday.

WHY IT IS IMPORTANT

Automakers in the United States have been shifting their focus back on higher-margin hybrids and gasoline-powered models as choppy demand for electric vehicles prompted them to pare back their ambitions for such units.

The numbers, closely watched by analysts and the industry, also shows how sustained demand for EVs has progressively fallen since last year despite better supply.

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BY THE NUMBERS

Total new vehicle sales for May 2024, including retail and non-retail transactions, are expected to reach 1,446,800 units, a 2.9% jump from a year ago.

Average transaction prices in the month are expected to be about $45,033, down $1,045 from a year ago. Average incentive spend per vehicle has grown 48.1% from a year ago and is on track to reach $2,640.

Total retailer profit per unit is expected to decline 31.5% in the month.

According to the report, 24% of shoppers said they were "very likely" to consider purchasing an EV in 2024, which is down from 26% a year ago.

KEY QUOTES

"The industry continues to produce more vehicles than are being sold, leading to rising inventories and increasing the likelihood of elevated discounts as the year progresses," said Thomas King, president of the data and analytics division at J.D. Power.

"We're seeing a 'low tide moment' for EVs right now, but it's unclear how long it will last," said Elizabeth Krear, vice president, electric vehicle practice at J.D. Power.

"Shoppers who are rejecting EVs point to lack of charging station availability, purchase price, limited driving distance per charge, time required to charge and inability to charge at home or work," Krear added.

(Reporting by Nathan Gomes in Bengaluru; Editing by Shilpi Majumdar)