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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.

Bob Lutz builds the case for a mid-engined Corvette

Rumors of a mid-engine Corvette are like automotive industry folklore at this point. Every once in a while, news pops up that it might be happening or is under development, but nothing actually ever comes to fruition as something people can actually buy. The latest spy shots strongly suggest a mid-engine 'Vette is in the cards, yet again, possibly for 2018. Now, an op ed by former General Motors executive (and definite performance car fan) Bob Lutz in Road & Track gives the inside scoop on the history of one of these proposals and lays out how to make it happen today. According to Lutz, the company's engineers believed the C6 ZR1 was at the limit for front-engine, rear-wheel drive performance in that package, and the only solution was to move the powerplant behind the driver. Lutz even got then CEO Rick Wagoner on board. The scheme made it at least as far as clay models for mid-engine versions of the 'Vette and Cadillac XLR. Eventually, a lack of money got in the way, though, bringing the project to an end. Lutz puts a lot of faith in GM's current leaders, especially Mary Barra and Mark Reuss. He thinks the chances of a mid-engine 'Vette happening this time are better than 50 percent. The model, rumored to be named Zora, could offer over 700 horsepower in an ultra lightweight body and be priced at about $120,000 to "suck the doors off everybody." Head over to Road & Track to get some insights from this highly respected and entertaining auto industry veteran. Related Video:

Buick Encore, Chevy Trax earn Top Safety Pick from IIHS [w/video]

The Buick Encore has been a massive sales success practically from the moment it debuted, and Buick recently decided to increase production to keep up with demand for the premium compact crossover. The Insurance Institute for Highway Safety recently put one to the test again, and the Encore earned a Top Safety Pick award. It's the first model from the brand to score the nod since 2013, according to the IIHS, and the rating also carries over to the 2015 Chevrolet Trax. The 2015 Encore scored a Good rating in all of the IIHS' evaluations, including the 40-mile-per-hour, small overlap front crash test. That was a big improvement over the previous model the institute tested, which scored a Poor result in the overlap test. In the first test, about 13 inches of the lower door hinge pillar came into the passenger compartment, and the steering wheel airbag moved too far to protect the dummy's head. Improvements for the latest model year showed six inches of intrusion this time, and the airbags caught the dummy's head well. The dummy's sensors also indicated a low risk of injury. The two CUVs missed out on the full Top Safety Pick+ because the IIHS scored the Encore as only having a basic front crash prevention system, and there was no such equipment for the Trax. To earn the highest mark, models need at least an advanced rating by the institute for this technology. Buick Encore, Chevrolet Trax earn 2015 TOP SAFETY PICK award ARLINGTON, Va. - A small SUV is the first vehicle from the Buick brand to qualify for a TOP SAFETY PICK award from the Insurance Institute for Highway Safety since 2013. The Buick Encore's newly introduced, lower-priced twin, the Chevrolet Trax, also qualifies for the honor. The Encore's award follows improvements to the SUV's structure for better small overlap front protection. The 2015 model earns a good rating in the small overlap test. In contrast, the 2013-14 Encore rated poor in the test. The driver's space was seriously compromised with intrusion measuring as much as 13 inches at the lower door hinge pillar. The dummy's head barely contacted the front airbag before sliding off the left side, as the steering column moved to the right. The side curtain airbag deployed too late and didn't have sufficient forward coverage to protect the head. In the latest test, the driver space was maintained reasonably well, with maximum intrusion of 6 inches at the door hinge pillar and instrument panel. The dummy's movement was well-controlled.