Despite huge discounts, U.S. auto sales plunged for the fifth consecutive month as sales of Detroit giants General Motors (GM, Financial) and Chrysler (FCAU, Financial) and other automakers including Hyundai (XKRX:005380, Financial) and Toyota (TM, Financial) dropped in May. The seasonally adjusted annual sales rate came in at 16.7 million units, down as compared with May 2016 when the figure was 17.2 million units.
What came as a surprise this month was that Ford (F, Financial) performed better in sales than its archrival General Motors. Ford outperformed GM by 3,000 new cars and trucks in this month which momentarily makes Ford the largest U.S. carmaker.
Here’s a thorough analysis of automakers' performances in May.
U.S. automakers: A snapshot
General Motors said that its May sales declined a meager 1.3% to 237,364 vehicles year over year. The decline is attributable to poor sales of Chevrolet (down 3.8% year over year) and GMC (down 5.2% year over year). By contrast, retail sales surged 0.4% to 191,388 units. Shifting focus to the brands, sales of Buick and Cadillac were commendable, up 28.5% and 9.2%. Crossover sales looked impressive as all vehicles saw double-digit sales gains. Robust crossover SUV sales were not able to compensate for a huge 36% sales decline to rental car companies.
Ford is the only American automaker to report positive sales growth. Sales grew 2.2% to 241,126 units. Ford outsold GM for the first time since March 2016. F-150 enjoyed a 12.8% sales growth to approximately 76,000 units and also was the best-selling vehicle for May. Ford brand sales climbed 2.1% whereas the sales of the luxury Lincoln brand soared 4.9%. In contrast, retail sales dropped 0.8%.
Investors are also pleased to see that inventories are falling. At the end of the month, the company had 72 days' supply of vehicles versus 83 days in the previous month.
Source: www.goodcarbadcar.net
Chrysler sales plunged 0.9% to 193,040 units. While sales of Jeep and Fiat were up 15% and 16%, Chrysler brand deliveries decreased 1.8%. Ram and Dodge deliveries plunged 18.2% and 8.2%. Alfa Romeo sales amounted to 919 units in May versus 44 units sold in May 2016.
Performances of other automakers
The world’s largest automaker Toyota witnessed a 0.5% sales decline as Lexus luxury brand sales plummeted 4.8%. The gloomy part is that Corolla, Prius and Camry posted double-digit sales declines. In contrast, Toyota division sales spiked 0.1%. RAV4 was the best-selling vehicle for the month, up 18.9% to 38,356 units.
Nissan (NSANY, Financial) witnessed staggering sales in May, up 3% year over year to 137,471 units. The sales gain was clearly attributable to huge volumes of sales of Nissan Rogue whose sales rose 18.6% to 32,533 vehicles. Nissan brand and the luxury Infiniti brand also contributed to the volume growth, up 1.9% and 15.6%. Moreover, Honda (HMC, Financial) sales surged 0.9%.
Last word
The overall industry sale softened, though steep discounts were available from automakers. Analysts say carmakers may have to continue with the discounts or cut production to lower inventory levels.
Though the overall automotive environment appears dull, demand for crossovers, SUVs and pickup trucks have remained resilient. As car sales are diminishing, higher sales of larger vehicles will somewhat support the industry’s bottom line.
Also, what slowed sales growth was that people are holding on to their cars and trucks longer with average vehicle ages north of 11 years, thanks to the superiority and reliability of the products. What remains to be seen is how automakers will handle this slowdown in the U.S. auto industry.
Disclosure: I do not hold any position in the stocks mentioned in this article.
