Auto market check in: Production uneven despite stronger late sales

Assembly split emerges

Total motor vehicle assemblies averaged a 10.4 million-unit seasonally adjusted annual rate (SAAR) from January through May, 1.2% above the average monthly rate during the corresponding 2025 period. January accounted for much of that increase.

Total assemblies increased 10.4% year over year in January, declined 0.3% in February and 0.8% in March, increased 1.7% in April and then declined 3.7% in May.

Light trucks accounted for nearly all of the increase in vehicle assemblies during the first five months of 2026. Their average monthly assembly rate increased 3% from the prior year period to 8.945 million units SAAR, while passenger car assemblies averaged 8.4% lower at 1.207 million units.

Light trucks, a category that includes SUVs, account for a much larger portion of total assemblies than passenger cars. Their higher output was sufficient to offset the decline in passenger car assemblies and leave combined auto and light truck assemblies 1.5% above the first five months of 2025.

That said, even light truck output lost some year-over-year momentum by May. Assemblies increased 14.2% in January, then recorded smaller gains in February, March and April. May light truck assemblies declined 3.2% from a year earlier.

Passenger car assemblies remained below 2025 in each month of the January through May, ranging from 5.5% in March to a 12.1% decline in February.

Beyond final assembly

The broader manufacturing data suggests the increase in vehicle assembly was concentrated rather than broad-based.

The Federal Reserve’s industrial production index for motor vehicles and parts averaged 105.831 from January through May, only 0.56% above the corresponding 2025 average.

The index covers a wider portion of the manufacturing chain than final vehicle assemblies, including vehicle bodies, trailers and motor vehicle parts.

Again, January marked the largest year-over-year increase, rising 6.1% year over year, but the following monthly comparisons alternated between small increases and decreases. May recorded the highest index reading of 2026 at 108.596, yet remained 1.7% below May 2025.

Domestic auto production figures from the US Bureau of Economic Analysis (BEA) showed a clearer decline. The seasonally adjusted monthly production figure averaged 100,590 vehicles from January through May, down 7.76% from the same 2025 average. Production remained below its prior-year level in every month during the period.

For clarity, the three data series measure different portions of the automotive manufacturing supply chain. The Federal Reserve’s total motor vehicle assemblies series measures final vehicle assembly, while its motor vehicles and parts industrial production index captures the broader manufacturing base. The BEA’s domestic auto production series focuses on passenger cars.

The BEA domestic auto production series closely mirrored the roughly 8% decline in the Federal Reserve’s passenger car assembly data. Meanwhile, the Federal Reserve’s total motor vehicle assembly series also includes light trucks, whose nearly 3% average increase offset lower passenger car and medium- and heavy-truck assemblies, leaving total assemblies modestly higher.

The motor vehicles and parts industrial production index increased only slightly through May. It could be inferred that broader automotive manufacturing changed less than final vehicle assembly during the period.

Yet within the constituent parts of motor vehicle and parts industrial production, heavy-duty truck manufacturing and motor vehicle body and trailer production declined. Meanwhile, motor vehicle parts production by itself increased at roughly 1.2% through May, the same pace as total vehicle assemblies.

The motor vehicle and parts industrial production index increased only modestly through May, indicating broader automotive manufacturing changed less than final vehicle assembly during the period.

That said, the index’s component industries followed different paths.

Heavy-duty truck manufacturing and motor vehicle body and trailer production declined from their January-May 2025 averages. Meanwhile, motor vehicle parts industrial production readings averaged about 1.2% higher, matching the increase in total motor vehicle assemblies over the same period.

Sales outpaced production

The most recent sales figures broadly align with the production split by vehicle type.

Total vehicle sales averaged a 16.265 million-unit SAAR from January through June, down 3% from the comparable 2025 average. More specifically, light vehicle sales averaged 2.7% lower.

Total sales trailed 2025 from January through April, then increased 2.9% in May and 4.1% in June. Light vehicle sales followed a similar trajectory, moving from a 5.7% decrease in January to a 4.4% increase in June.

Production didn’t show the same broad late spring acceleration through May. Total assemblies were lower year over year in May, the wider motor vehicles and parts production index was down 1.7% and domestic auto production remained more than 8% lower.

Domestic light truck sales averaged only 0.4% below the first half of 2025, compared with a 8% decrease for domestic passenger cars. Foreign passenger car sales averaged 11% lower, while foreign light truck sales averaged 5.1% lower despite a 14.7% year-over-year increase in June.

Foreign light truck sales faced unusually high March and April 2025 comparisons before the Section 232 tariff implementation and a lower comparison in June 2025 after the tariff took effect. The June increase therefore marks a strong reading for the latest month, but the six-month average remained below the prior year.

Passenger car inventories rise

Inventory data indicate lower passenger car production reflected manufacturers’ production decisions rather than supply constraints.

The BEA’s domestic auto inventory data, which measures only passenger cars rather than light trucks or the broader vehicle market, averaged 197,815 seasonally adjusted units from January through May, down 0.46% from the 198,733-unit average during the previous year period. However, the monthly comparisons changed beginning in the spring.

Inventories were 13.1% below their 2025 level in January and 9.3% lower in February. They then increased 4% year over year in March, 10.6% in April and 6.6% in May.

The inventory-to-sales ratio averaged 1.370 from January through May, 9.46% above the 1.252 average in the year earlier period. Inventories also rose sequentially from 180,269 units in January to 215,116 in May, an increase of 19.3%.

May inventories exceeded May 2025 even though domestic auto production was 8.2% lower year over year.

In other words, those figures show that reduced passenger car production didn’t deplete finished inventories. Manufacturers produced fewer cars, but supply remained sufficient relative to the pace of sales.

The higher inventory-to-sales ratio also place the late increase in vehicle sales in context. Sales accelerated in May and June, but available inventory data through May still showed a heavier stock position relative to sales than during the same period of 2025.

North American passenger car imports diverge

Finished auto imports from Canada and Mexico moved in opposite directions through April.

Canadian auto imports averaged 37,353 seasonally adjusted units per month from January through April, down 34.2% from the 56,754-unit monthly average during the same 2025 period. Every monthly comparison showed a year-over-year decrease.

Conversely, Mexican auto imports averaged 117,864 units per month, up 6.9% from 110,310 units during January-April 2025. The increase was concentrated in March and April, including a 42.7% year-over-year gain in April.

Combined Canadian and Mexican imports averaged 155,216 units per month through April, down 7.1% from the prior year period. Mexico only partially offset the reduction in Canadian imports.

Domestic passenger car production didn’t fill that gap because it also declined. Yet domestic inventories moved above their 2025 levels by March and remained higher through May.

For the US passenger car market, the supply chain appears to have adjusted through lower domestic production, import origin and inventory levels.

Looking ahead

Overall, the government data shows the automotive manufacturing sector continued to adjust by vehicle segment instead of broad production growth.

Light trucks accounted for most of the increase in vehicle assemblies, while passenger car production remained below the prior year without creating tight inventories.

Production, inventories and import flows all indicate manufacturers largely aligned passenger car output with prevailing market conditions during the first half of 2026.