Detroit automakers sales dip, drag industry down
Ford, General Mot-ors, Fiat Chrysler and Hyundai all reported US sales drop last month, apparently dragging the industry to its sixth straight month of declining numbers as auto sales slow from last year's record pace.
Fiat Chrysler sales were down 7.4 per cent, while Ford said its sales declined 5.1 per cent. GM was off 4.7 per cent and Korean automaker Hyundai posted a hefty 19.2 per cent decrease.
Analysts were predicting an overall June drop of more than two per cent when all sales numbers come in, even though Toyota, Nissan and Honda each reported small gains.
If June sales fall as expected, sales for the first half of the year would be down for the first time since the financial crisis in 2009.
But Autotrader senior analyst Michelle Krebs said a small dip is not an indication of economic troubles since unemployment is low and consumer confidence remains high. She doesn't expect a big recovery in the second half of the year, but also doesn't see a huge decline, predicting full-year sales from between 16.8 million to 17.3 million. That's below last year's record of 17.55 million.
"We think the second half could be a little bit stronger than the first half was," says Krebs, who expects 2016 still to be the fifth-best year on record. "We don't see any imbalances that suggest anything is going to collapse."
Krebs says sales should remain healthy even though credit is tightening slightly and automakers are cutting back on sweet lease deals. "We're down but not out," she said.
cutting back on deals
Auto companies are cutting back on lease deals as used-car values fall, curtailing another incentive to buy, says Jessica Caldwell, executive director of analysis for Edmunds.com. She says now is the time to buy a car with dealer stockpiles growing before production cuts take effect later in the year.
With few exceptions, US buyers continued a trend they've been following for years. They're buying SUVs and trucks and shunning cars. Sales of Toyota's Camry, normally the top-selling non-pickup truck in the US, fell nearly 10 per cent. But Ford's F-Series pickup, the top-selling vehicle in America, rose nearly 10 per cent.
The shift is good news for companies that rely heavily on pickup trucks and SUVs, such as Ford, GM and Fiat Chrysler.
Mark LaNeve, Ford's vice-president of sales, said even though Ford's retail sales to individual customers were down one per cent in the first half of the year, its revenue will be up because of strong sales of loaded-out pickup trucks.
The shift won't be such good news for brands like Hyundai, which is heavily dependent on car sales. Sales of Hyundai's Elantra compact car, normally among the brand's top-selling vehicles, fell more than 40 per cent to just over 13,000. A year ago, Hyundai set a sales record for the month of June.