U.S. light-vehicle sales fell by double digits for the third straight month at Hyundai and Kia as choked parts supply chains continue to batter automakers, leaving showrooms and lots nearly bare of new cars and light trucks.

Hyundai deliveries last month slid 34 percent to 59,432, with all of them retail, the company said Wednesday. It was Hyundai’s biggest decline since the start of the pandemic when sales dropped 39 percent in April 2020 and 43 percent in March 2020.

Hyundai ended May with 18,641 vehicles in dealer stock, up from 15,809 at the end of April but off from 91,249 at the close of May 2021, a spokesperson said. The company recorded zero fleet shipments for the fifth straight month as it prioritizes more profitable retail business.

“There continues to be extraordinary consumer demand for Hyundai vehicles, with dealers selling every vehicle they get,” Randy Parker, senior vice president for national sales at Hyundai Motor America, said in a statement. “We expect demand to remain strong and inventory levels to improve later in 2022.”

Kia’s May sales dropped 29 percent to 57,941 on sharply lower car deliveries, as well as a decline in key crossovers such as the Sorrento, Seltos, Sportage and Telluride.

Kia said its dealer stocks continued to hover around 9,000 cars and crossovers at the end of May, or 30,000 below May 2021 levels.

At Genesis, sales rose 18 percent to a May record of 4,400 on higher G70 and GV70 sales.

Toyota Motor Corp., Honda Motor Co., Subaru and Mazda are expected to release May results Wednesday, followed by sales from Ford Motor Co. and Volvo on Thursday. The rest of the industry reports U.S. sales on a quarterly basis.

The U.S. light-vehicle market is expected to lose more momentum in May, with the seasonally adjusted, annualized rate of sales expected to fall as low as 13.1 million, the lowest of the year so far, based on a range of forecasts from J.D. Power, LMC Automotive, TrueCar and Cox Automotive. That would be down from April’s 14.7 million pace and May 2021’s 17.12 million rate, which capped one of the hottest three-month stretches ever for the U.S. auto market.

Bob Carter, executive vice president for sales at Toyota Motor North America, on Tuesday said the company is projecting a May SAAR of 13.6 million to 13.8 million.

Overall, forecasters expect sales to drop 17 to 28 percent last month from May 2021, which, at 1.59 million vehicles, was the second-best month in 2021.

“Historically, the daily sales pace is higher in May than in most other months, with spring optimism in the air, thoughts of summer road trips on the horizon and the buzz of Memorial Day sales,” said Charlie Chesbrough, senior economist at Cox Automotive. “But many of the industry’s normal patterns have been overturned by tight inventory and the lingering effect of the global pandemic.”

A chronic shortage of microchips worldwide continues to dampen production, and severe COVID-19 lockdowns in China’s main auto manufacturing hubs, notably Shanghai, have hampered parts output and shipments to North America.

J.D. Power and LMC Automotive said new-vehicle retail inventories ended May below 1 million vehicles for the 12th consecutive month.

In North America, car and light-truck production rose only 4.4 percent in the first four months of the year, according to the Automotive News Research & Data Center, with output down at five automakers: Toyota, Honda, Nissan, Volkswagen and Volvo.

In Cleveland, Toyota ads routinely tell TV viewers that new vehicles are arriving at local showrooms daily. What’s not mentioned: Many of them have already been sold.

At Motorcars Toyota in Cleveland Heights, Ohio, the wait for a new Sienna – the nation’s top-selling minivan in 2021 – is now 12 months. The backlog for delivery of the all-new Toyota Corolla Cross crossover is becoming just as long.

Derek Roberts, sales manager at the dealership, said of the 98 new vehicles last weekend in stock, in transit or allocated in coming weeks, 79 were already reserved. On Saturday, on what is normally a busy Memorial Day weekend, there was one new vehicle available for sale – a white 4Runner SUV.

Honda has advised some U.S. dealers that the company’s lean inventories won’t improve meaningful until at least October 2023. That means some dealers can’t expect to receive, on average, more than 20, maybe 30 or 40, new light vehicles a month to sell. And when inventory does return to normal, Honda is telling dealers it won’t be what they are used to – row after row after row of shiny new Civics, Accords and CR-Vs.

With new-vehicle inventories sparse, and consumer demand still high, the average incentive on a new vehicle is expected to decline from $2,726 in May 2021 to $965 last month. Incentive spending as a percentage of the average sticker price is forecast to fall to a record-low 2.1 percent, down 4.4 percentage points from May 2021, J.D. Power and LMC Automotive said. TrueCar estimates incentives dropped 59 percent to $1,251 in May vs. May 2021, with five automakers – Honda, Toyota, Kia, Subaru and Hyundai – having discounts per vehicle well below $1,000. (See nearby chart.)

The average transaction price for a new car or light truck is expected to reach a May record of $44,832, J.D. Power and LMC Automotive predict, a 16 percent increase from a year earlier and the third-highest level on record.

“We’re continuing to see a struggle for supply among the industry, however, we’re also now starting to see signs of demand adjusting,” said TrueCar analyst Nick Woolard. “Higher interest rates combined with higher fuel prices present a headwind to demand.”

  • There were 24 selling days last month vs. 26 in May 2021 and 27 in April.
  • Fleet deliveries are expected to tally 174,400 in May, up 3.8 percent from May 2021, when adjusted for selling days, J.D. Power and LMC Automotive predict, and fleet volume is expected to account for 15 percent of total light-vehicle sales last month, up from 12 percent in May 2021.
  • Leasing will account for just 18 percent of retail sales in May, J.D. Power and LMC say.
  • The average interest rate on new vehicles was 5.1 percent in May compared with 4.8 percent in April, TrueCar said.
  • The average loan term on a new vehicle for May 2022 was about 71 months, according to TrueCar.

“There is not enough supply of sellable vehicles to support demand, and that issue is not expected to improve enough through the rest of the year to overcome the new risks. As recovery is pushed out even further and consumers feel more of the effect of rising prices, lack of demand may become the issue once supply can catch up after 2023.”

— Jeff Schuster, president of Americas operations and global vehicle forecasts at LMC Automotive

Omari Gardner and Carly Schaffner contributed to this report.