Analysis of May’s light vehicle markets shows recovery continued, but it is fragile and coming off a very low base.

Global light vehicle sales increased 36.2% in May, but in the recovery phase an eye on SAAR remains more important.

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For SAAR it was the continued story of ‘one-step forward and then two-steps back’. After March and April’s strong showing the global market regressed to the hesitant levels of January and February with a SAAR of 80.8m recorded, the lowest level since January and February.

Despite the positive year-on-year gains, it was largely a disappointing month for sales. The SAAR for most regions – excluding North America – slipped back markedly in May demonstrating the fragility of the recovery in most markets. In Asia, the decline in SAAR was unsurprisingly most obvious in India as the country battled its 2nd wave of infections.

The perilous state of many economies, Covid-19 infection rates, the progression of new variants and the stringency of lockdown measures all affect light vehicle sales. In key West European markets, a direct correlation was apparent between lockdown stringency and sales in May. In Chile, the success of the vaccination program there allowed the market to outperform other markets in May.

In general, May’s market finished below GlobalData’s expectations for the month. Our model baked in a 42% gain for the month, marginally stronger than the month’s 36% outcome.

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On the back of May’s sales, GlobalData’s forecast for the year has been downgraded to 85.5m, a 13% increase on 2020 but 4% lower than 2019’s total. After a series of months with year-on-year comparisons against low bases in play – as seen in February through to May – we anticipate that June will be the final month of double-digit year-on-year gains.

Our early West Europe assumption centred around ‘markets that lost most, would gain most’ has been derailed by both the Alpha variant of Covid-19 and the initial slow vaccination rollout in mainland Europe. Since January’s forecast, this has meant a 1.2m unit, or 8.1%, downward revision in our West Europe forecast.

As ever, that could be subject to change due to the ongoing disruption that the pandemic brings to markets