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Weekly Recap: The implications of strong new car sales

New car sales are on a roll in the United States this year, and analysts are optimistic the industry will maintain its torrid pace. Sales increased 1.6 percent in May and reached an eye-popping seasonally-adjusted selling rate of 17.8 million, the strongest pace since July 2005, according TrueCar research. That positions the industry for one of its strongest years ever, as consumer confidence, low interest rates, low fuel costs, and an influx of new products propel gains. In addition to the positive economic factors, May also featured warmer weather across much of the US, an extra weekend, and it came on the heels of relatively weak April sales. Analysts suggest income tax refunds and the promise of summer driving and vacations also traditionally help May sales. "While 2015 will be one of the best years in the history of the US industry, in some ways it may be the very best ever," IHS Automotive analyst Tom Libby wrote in a commentary. "Not only are new vehicle registration volumes approaching the record levels of the early 2000s, but now registrations and production capacity are much more closely aligned so the industry is much more healthy." Capacity, an indicator of the auto sector's health, is also expected to grow. Morgan Stanley predicts it will eventually hit at least 20 million units per year, as many companies, including General Motors, Ford, Tesla, and Volvo are investing in new or upgraded factories. "The best predictor of US auto sales is the growth in capacity, and frankly, we're losing count of all of the additions – there's literally something new and big every week," Morgan Stanley said in a research note. Transaction prices, another telling indicator, also continue to show strength. They rose four percent in May to $32,452 per vehicle, and incentives dropped $10 per vehicle to $2,661, TrueCar said. "New vehicle sector and segment preference indicates consumers are confident about the economy and their finances," TrueCar president John Krafcik said in a statement. Still, Morgan Stanley noted the robust sales did little to immediately impact automaker stock prices and suggested it might be a prime time to sell if sales reach the 18-million pace. "Perhaps the biggest reason may be that investors have seen this movie before," the firm wrote.

GM diesel pickups first to undergo extra EPA, CARB testing

The effects of Volkswagen's long-running diesel emissions evasion are starting to spill over to other automakers, but General Motors is taking things in stride. The 2.8-liter, four-cylinder Duramax in the 2016 Chevrolet Colorado and GMC Canyon is the first engine to get extra scrutiny by the Environmental Protection Agency and the California Air Resources Board, Automotive News reports. Rather than just the usual in-lab test, it's also being checked on the road. However, the extra evaluation shouldn't have any impact on when the trucks with his mill hit dealers later this fall. "We're in our final stages of the EPA certification, and our launch is on track," Chevy spokesperson Otie McKinley tells Autoblog. The four-cylinder diesel in the trucks makes 181 horsepower and 369 pound-feet of torque, and the automaker is touting low NOx production. In the announcement for the Colorado's specs, the company calls it "the cleanest diesel truck engine ever produced by General Motors." The tech includes exhaust gas recirculation to lower combustion temperatures and improve emissions. There's also a urea tank like on the bigger diesels for full-size trucks, and it gets refilled in time with oil changes. An indication on the instrument panel lets drivers know when that's needed, too. Even with the more demanding testing, the company doesn't seem too worried about the four-cylinder passing. "Part of our development process is on-road and off-road [laboratory] testing," Scott Yackley, Chevy Trucks assistant chief engineer, said to Automotive News. In the wake of the VW scandal, the EPA has pledged more rigorous testing. Before, on-road emissions evaluations were largely limited to heavy-duty vehicles, but the agency has decided to apply the checks more often to other models. There's also now greater cooperation with Canadian authorities.

GM recalls select Tahoes, Yukons, Escalades for rear driveshaft issue

GM is recalling a number of its full-size SUVs due to an issue with the rear driveshaft assembly that could ultimately result in driveshaft failure. The actual number of total vehicles involved in the recall is small at just 1,789, but it’s spread out across the entire 2021 model year full-size GM vehicle lineup. That means a small number of every model is being recalled, including the Chevrolet Tahoe, Suburban, GMC Yukon, Yukon XL and the Cadillac Escalade and Escalade ESV. GM traced the issue back to certain driveshaft assemblies with ball bearings that were not properly heat treated. If theyÂ’re not properly heat treated, GM says that the balls may deform over time, causing noise and vibration. Continue to drive in this condition, and GM says the affected joint in the driveshaft assembly could seize, causing loss of drive power. However, the problem wonÂ’t present itself all at once, as GM says there will be a gradual increase of noises and vibrations before total failure. For those few owners with affected vehicles, GM says that it will replace the left and right rear driveshaft assemblies with properly-built units. Per usual with recalls, this will be done at your local dealership at no cost to the owner. If you have one of the recalled SUVs, expect to be notified mid-March. Related video: