Domestic sales of light vehicles in May dropped to their lowest level since the beginning of the year, reflecting a falloff in purchasing after the last of the new US administration's import tariffs targeting the automotive industry went into effect at the beginning of the month.
Sales of light vehicles — trucks and cars — fell to a seasonally adjusted annual rate of 15.6mn units in May, down from 17.3mn in April, the Bureau of Economic Analysis reported Wednesday. Last month's total was below May 2024's annualized rate of 15.8mn and the lowest since this January's 15.5mn pace.
Consumers had rushed to buy ahead of US president Donald Trump implementing 25pc tariffs on imports of vehicles on 3 April and imports of parts on 3 May, with the latter expected to increase domestic automaker's production costs that would be passed on to consumers.
Automakers now will have to contend with higher costs for steel and aluminum after Trump on Tuesday doubled Section 232 import tariffs on those products and their derivatives to 50pc.
Borrowing costs also remain high for buyers, further disincentivizing large-scale purchases, as the US Federal Reserve continues to hold its target interest rate at 4.25-4.5pc on concerns that tariff-related uncertainty may fuel inflation and lead to a slowdown in economic growth.
Truck sales in May dropped by 9.1pc to a 13mn unit annual rate, while sales of cars dropped by 10pc to a 2.6mn unit rate in the same timeframe.
Domestic vehicle production in April fell to a seasonally adjusted annual rate of 10.16mn from an upwardly revised 10.21mn in in March, according to US Federal Reserve data. That compares with 10.57mn in April 2024. Auto assemblies are reported with a one-month lag to sales.
