Auto sales rebounded in May after dismal April

Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Pras Subramanian break down auto sales numbers for the month of May.

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BRIAN SOZZI: Yeah, auto sales are finally starting to accelerate in the right direction after 12 million car-- 12 million cars were sold in May. That's still far off the yearly highs. But it's a nice bounce back from the 8 and 1/2 million pace of sales in April because of the COVID-19 pandemic.

Yahoo Finance's resident car expert/pro Pras Subramanian joins us now. Pras, what does this suggest about the health of the auto space? Should we expect-- are we seeing a V-shaped recovery?

PRAS SUBRAMANIAN: Hey Brian, Alexis, good to be back with you guys. You know, I wouldn't call it a V-shape, Brian. I'd say it's more like we're seeing some green shoots, right?

So typically, you see an average annual run rate of around 17 million cars sold per year. That's kind of how they measure the monthly sales, right? In the heart of the lockdowns in April, we had about 8.6 million-- so half, almost half gone.

We're back at 12.2. It's a nice start. But it's still about a third less than where we were before. So I think we're on the right direction.

But, I mean, even before the pandemic, there were some factors at play that were already kind of pushing down sales. We were seeing annual-- sorry, we were seeing average prices kind of creeping up higher as cars got more expensive. We were seeing auto delinquencies climbing up higher, too, because people couldn't make these payments. So there were others and other secular factors, like ride sharing, that were also kind of holding down sales just a little bit before the pandemic.

So it's good to see a little lift here. But I don't think we can count on going back to heady times, like 2019, 2018.

ALEXIS CHRISTOFOROUS: All right, Pras, but having said that, do you think we've at least hit rock bottom in April? I mean, is that the worst that the auto sector, you think, is going to see for a long time? And also, another point I want to make is truck sales seem to be doing well, even through the pandemic. Do you think that's something we're going to continue to see, especially with gas prices pretty low right now?

PRAS SUBRAMANIAN: Yeah, to answer the first part, 8.6 million-- I mean, that annual run rate, we have not seen that for generations, right? So that's definitely the low of kind of the pandemic lockdown season. As more dealerships opened up into mid-April and also in May, that number came up higher. I think that was sort of the bottom. And I think that we're just going to keep to trickling higher from here.

Truck sales-- yeah, truck sales are great. Talk about those anecdotal stories about-- I think Bloomberg did a piece on Toyota dealerships. And they were saying that they are out of pickups and SUVs because of the fact that a lot of their factories were shut down during the pandemic-- in the US, at least. So that's been happening.

There's strong demand for pickups, strong demand for SUVs, not too much for cars.

BRIAN SOZZI: Pras, is there one automaker doing better than the rest? I saw Mazda. Mazda looked OK. Who's buying a Mazda?

PRAS SUBRAMANIAN: Mazdas are drivers' cars, Brian. I know you're a big driver. They're nice cars to drive.

But it's funny you talk about auto sales. It's not necessarily-- some manufacturers are doing better than others. But it really comes out of the dealer networks, right?

So it's not so much like the Fords and Mazdas. It's the Vrooms, Carvanas, and CarMaxes that are doing better now, because people want to socially distance themselves when they buy cars. And people want cars to actually get to work without having to go into the subway or into mass transit. JPMorgan, very positive on CarMax yesterday, saying that they could-- the pandemic could actually ultimately accelerate the company's omnichannel rollout.

Vroom, right, they've just filed their IPO, their S-1. What do they say? Compared to a year ago, Q1, average monthly visitors up 200%. Vehicles on sale, up over 200%.

So we're seeing a lot of interesting trends in car buying now compared to pre-pandemic times.

BRIAN SOZZI: No, you're the real car guy here, Pras. And I encourage everyone, check out our Yahoo Finance YouTube page. This guy does some nice reviews with our Rick Newman of some high end-- very, very high end cars.

We'll leave it there. Yahoo Finance's Pras Subramanian, good to see you.

PRAS SUBRAMANIAN: Thanks, guys.