Why optimism is up in auto industry despite lower Jan. sales
By PHOEBE WALL HOWARD
Detroit Free Press
— It’s like a script from the classic Bill Murray movie “Groundhog Day.”
Yet again, truck and crossover vehicles sales buoyed automakers in January — even though overall industry sales are down from a year ago.
“Our pickup sales have grown every year for at least the last four years,” said Jim Cain, U.S. sales analyst for General Motors. “Sales for the industry as a whole look like they’re going to come in above expectations. You can never predict a full year based on January results, but we see very strong underlying demand. People are working, people are getting raises and people are getting tax cuts. That’s bringing them into the showroom for crossovers and trucks.”
GM isn’t alone. The numbers appear strong for Ford and Fiat Chrysler, too.
“Our all-new Expedition and Navigator are off to a hot start across the country,” said Mark LaNeve, Ford vice president, U.S. marketing, sales and service.
And F-Series sales of 58,937 vehicles in January represent the truck’s best start to a year since 2004.
Severe winter weather, though, including the so-called bomb cyclone that slammed the East Coast, likely hurt U.S. new-car sales in January.
When adjusting figures for the number of actual selling days in January compared with a year earlier, industry sales are down.
That’s not unexpected. Sales of new vehicles have cooled off as Americans are buying more lightly used vehicles that are coming off three-year leases. Other consumers are keeping their current vehicles longer because quality and durability have improved considerably.
Still, January’s selling rate, if it continued throughout the year, would still be highly profitable for most companies.
Also, automakers are selling high-margin SUVs and pickup trucks in droves.
“What people want is choice, which is why our three-truck pickup strategy is perfect for the market – midsize, half-ton and one-ton: Chevrolet Colorado, GMC Canyon, Chevrolet Silverado and GMC Sierra,” Cain said. “Having a broader portfolio lets you sell to the commercial buyer, small business owner, farmer and rancher, do-it-yourself suburban household and sports enthusiasts. Some people two big toys and some haul heavy loads.”
While auto industry sales slipped compared with January 2017, companies reported strong sales of trucks and crossovers.
Honda and Toyota maintained their roles as dependable choices for cars as consumers gravitated to the new Honda Accord and Toyota Camry.
Overall, Fiat Chrysler saw a significant drop in sales while General Motors and Ford reported flat numbers. The launch of the popular Jeep Wrangler and Ram 1500 are expected to carry the day for FCA in coming months.
The average vehicle transaction price of $36,270 for light vehicles was down in January 2018 from December 2017, but up from a year ago.
GM saw an average transaction price jump of 4 percent from January 2017 with the help of GMC’s redesigned Terrain. And the redesigned Enclave carried Buick to a 5 percent higher transaction price. Ram trucks and Jeeps pushed Fiat Chrysler to a 4 percent average price increase in January as sales of the Jeep Compass climbed.
The shifting sales mix to trucks and sport utility vehicles has been dramatic, and as volume shifts away from cars, the average vehicle price ticks up, said Tim Fleming, analyst for Kelley Blue Book.
“There was a glimmer of hope in the midsize car segment, thanks to the newest generations of the Toyota Camry and Honda Accord,” he said. “These well-received new models, along with the redesign of the Nissan Altima due later this year, will test how much demand still exists for sedans.”
New car prices went up $1,360 or nearly 4 percent from January 2017, while dropping $486, or a little more than 1 percent from last month, according to Kelley Blue Book analysts.
Volkswagen Group, which includes Audi and Porsche, had the highest average transaction price with $42,243, followed by GM with $40,313 and Ford with $40,156. Prices do not include applied consumer incentives.
Here’s how each individual automaker fared in January sales, compared with a year earlier:General MotorsUp 1.3 percent
GM sold 198,548 vehicles to U.S. customers in January. The company’s flagship Chevrolet brand posted a 5 percent increase, powered by a 14.5 percent rise in sales of the Silverado full-size pickup truck to 40,716. The Colorado midsize pickup also recorded a rise of 24.9 percent to 8,011.
But Cadillac’s slump continued, as the luxury brand fell 3.9 percent. The GMC brand was down 11.4 percent and Buick rose 4 percent.FordDown 6.6 percent
Ford sold 161,143 vehicles for the month. The company’s namesake brand was down 5.6 percent to 154,733, while the luxury Lincoln brand plunged 27 percent to 6,410.
More than four in five Ford vehicles sold were pickups, vans, crossovers or SUVs. Passenger-car sales plummeted 23 percent.
The only segment that was up was pickups and vans, which rose 2.2 percent.
The company’s F-series lineup, the most popular model in the U.S., rose 1.6 percent to 58,937, posting its best January in 14 years.
And people are paying more than ever for the F-series, which averaged $47,800 in January. That’s up $1,400 from a year earlier and up $140 from December’s previous high.
Mustang retail sales increased 10.7 percent with a total of 4,732 cars sold.Fiat ChryslerDown 12.8 percent
The Italian-American automaker sold 132,803 vehicles in the U.S. in January. The company has been intentionally reducing sales to rental car companies, partially explaining the decline. Those types of sales are less profitable than retail sales.
The Jeep brand eked out a 2.2 percent increase. The Chrysler, Dodge, Ram and Fiat brands declined 20.9 percent, 31.2 percent, 15.8 percent and 43.2 percent, respectively.