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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 recalls 740,000 vehicles over daytime running light issue

General Motors is recalling over 740,000 vehicles due to a daytime running light issue that causes all of the affected cars to run afoul of Federal Motor Vehicle Safety Standards. Vehicles affected by this recall are spread across many of GM’s brands. Models include the 2020-2023 Cadillac CT4 and CT5, 2021-2023 Buick Envision, 2022-2023 Cadillac Escalade and Escalade ESV, 2022-2023 Chevrolet Silverado 1500, Suburban, Tahoe and 2022-2023 GMC Sierra 1500, Yukon, and Yukon XL. GM says that the daytime running lights may remain on in these cars when the headlights are activated. This is a problem, because FMVSS rules require that the daytime running lights deactivate once the headlights turn on. If the DRLs remain on, GM says that could result in additional glare, thereby increasing the risk of an accident. The cause of this failure to deactivate the DRLs comes from body control module software that “under a combination of certain pre-conditions, could fail to deactivate the DRLs,” according to GM. Other GM vehicles were tested, but due to a difference in software or hardware, they remain unaffected. If this is reminding you of another recent GM recall, youÂ’d be right, as GM recalled another 340,000 vehicles for the same issue last month. After that original issue was found within GM, the company began looking into its other cars to determine if the population was larger than originally thought. GM found the additional vehicles included in todayÂ’s recall have the problem. The fix will either be via an over-the-air update or it will require you to bring the vehicle into a dealer for a software update, depending on which vehicle you have. Owner notification letters letting folks know what is necessary are currently scheduled to go out on January 23, 2023. Related video: Cadillac Escalade Infotainment Review

Updated Chevy Silverado spied, possibly with aluminum components

Chevrolet is readying a refresh for its trusty Silverado pickup, and these spy shots give us our first glimpse at what might be in store. The front and rear fascias of this prototype are covered, obscuring some styling tweaks (with LED accents up front). More interestingly, our spies suggest that many of the Silverado's body components could move to aluminum with this mid-cycle update. The hood will go from steel to the lighter alloy, and it's possible the front fenders could benefit from the weight-saving material, too. Ford's latest F-150 is extremely aluminum-intensive, and by switching the construction, 700 pounds was trimmed off the truck's weight. We've already heard that General Motors is working with a similar plan for its next-generation fullsize trucks. Beyond that, expect the smaller 5.3-liter V8 to ditch its six-speed automatic transmission in favor of the eight-speed unit that's already mated to the larger, 6.2-liter V8. Neither transmission will stick around very long, as the trucks will likely adopt a 10-speed automatic around 2017. Look for the updated Silverado to debut later this year, likely as a 2016.5 model.