U.S. auto sales plunged for the fourth successive month in June, down 3%. All the Detroit giants registered disappointing sales declines for the month compared to a year ago. Based on the first half of the year, the prospects for the remainder of the year look bleak, indicating this year’s industrial sales will fall short of last year’s record sales.
The sales projections for the full year now stand at 17.1 million units, which would represent a 3% sales decline from 2016’s record sales. Retail demand has been waning over the past several quarters. SUVs and crossovers, however, put on a good show in June, witnessing robust demand. Executives remain optimistic as buyers are opting for high-priced vehicles that will help the industry increase earnings.
Charlie Chesbrough, senior economist at Cox Automotive, commented:
"June's sales numbers reaffirm that the U.S. vehicle sales are in a post-peak phase…The U.S. economy remains strong -- confidence is high, unemployment is low -- and this will continue to support vehicle demand over the near term."
Here is a detailed look at the monthly performance of several automakers.
The Detroit Three
General Motors Co. (GM, Financial) reported its June sales plummeted 5% to 243,155 units. Sales of GMC, Chevrolet and Cadillac dropped 3.6%, 6.4% and 11.8%. In contrast, Buick sales soared 16.4% led by impressive sales of Envision SUV (up 248%) and small Encore SUV (up 7%). The average transaction price, however, surged $400 each as they sold remarkable volumes of large vehicles. There are other positives the company can take out of its June sales, including 49% sales growth of the all-new Chevrolet Cruze compact car and 27% sales increase of the GMC Acadia SUV.
Source: www.goodcarbadcar.net
Ford Motor Co. (F, Financial) reported a 5% year-over-year sales drop in June to 227,166 cars and trucks. The company’s sales fell on the back of poor fleet sales to rental companies, down 13.9% from the same period last year. Sales of the company’s SUVs- Explorer, Edge and Flex- spiked 23%, 20% and 26%. In contrast, the Focus compact car and Fusion mid-size sedan saw sales decline 20% and 31%.
Source: www.goodcarbadcar.net
Fiat Chrysler Automobiles (FCAU, Financial) posted a 7.4% sales slump for the month of June. The Ram pickup truck and the new Alfa Romeo experienced staggering sales in June while sales of Dodge and Chrysler fell 14% and 15% respectively. Moreover, fleet sales plunged 15% on a year-over-year basis.
Performance of other automakers
The world’s largest automaker, Toyota Motor Corp. (TM, Financial), saw a 2.1% sales increase in June. The sales gain was powered by huge sales volumes of RAV4 (up 24.7% year over year) and 4Runner (up 16.6% year over year). In contrast, sales of the Lexus luxury car brand plummeted 5.4% on a year-over-year basis. Fortunately, this did not have an adverse impact on the company’s growth this month.
Honda Motor Co. Ltd. (HMC, Financial) sales soared a meager 1% to 139,793 vehicles. The sales gain is attributable to solid sales of HR-V, up 35% compared to June 2016. Nissan Motor Co. Ltd. (NSANY, Financial) reported a 2% sales increase compared to last year's combined sales of SUVs, trucks and crossovers surge of 19.5%. Sedan sales, however, plunged 12.1%.
Last word
Trucks and SUVs remain the highlight for the month as they witnessed sales growth of 13% and accounted for 63% of sales in June. Car sales, however, plunged 13% year over year. Car sales have clearly softened from last year. Rising employment and customer confidence, along with an order boost in U.S. factories, will definitely increase car sales in the future.
The second half of the year is now crucial for automakers as they look to keep pace with the record year in 2016. Despite lackluster sales in the first half of the year, the U.S. auto sales forecast for 2017 remains 17.1 million units. It will be interesting to see whether the automakers will be able to achieve this target together.
Disclosure: I do not hold any position in the stocks mentioned in this article.
