May new-vehicle sales are forecast to be up significantly from a year ago, but that’s largely due to the fact that last year at this time sales fell after an earlier spring run on dealer lots to beat trade tariff inflation.

A joint JD Power-GlobalData report projects retail sales for the month to be up 6% year-over-year to 1.2 million units and a seasonally adjusted annual rate of 13.6 million units, up about 600,000 from a year earlier.

“… year-over-year comparisons are being clouded by what happened a year ago when consumers reacted to the perceived risk of higher prices from vehicle tariffs, said JD Power President of OEM Solutions Thomas King, who nevertheless called this May’s sales pace “impressive.”

Auto financing conditions moved somewhat in consumers’ favor this month, according to the report, as the projected average new-vehicle loan interest rate has fallen about half a percentage point to 6.6%.

Meanwhile, the forecast sees a flat average transaction price of $46,023 year-over-year.

Still, monthly payments are up as consumers who last purchased vehicles at pandemic-era price peaks returned to market with low trade-in equity, JD Power said. Average payments sealed this month are up about 3% to a scorching $810.

King said automakers are moving to fill the affordability gaps with increased discounts. The report put average per-vehicle incentive spending up about 21% year-over-year to $3,297.

That balancing effect, though, is also skewed by an incentives pullback last May when brands sought to offset tariff hits, according to the report.

To swallow the inflated costs, 13% of May borrowers took out loans of 84 months or longer.

And to balance budgets hit with high gas prices, many shoppers opted for hybrid models. The report indicates retail hybrid sales share rose nearly two points to 16%. 

Meanwhile, about 23% of this month’s shoppers have gone the lease route with its typically lower payments.