U.S. auto sales for February, which came out on Friday, plunged year-over-year owing to low demand for SUVs. In fact, new vehicle sales failed to meet expectations. Factors that adversely impacted the month’s sales report also included rising vehicle prices and interest rates, costs associated with import tariffs and cold weather.
Performance of US automakers
General Motors (GM, Financial) and Ford Motor Co. (F, Financial) have shifted to quarterly sales reporting. However, Cox Automotive analysts estimate that sales decreased 1.3% for General Motors and 1.7% for Ford.
Fiat Chrysler Automobile (FCA, Financial) witnessed a 2% sales decline in February to 162,036 units. What hurt the company’s sales the most was the diminishing demand for its Fiat brand, down a mammoth 50% in the month to 616 units. Fiat brand’s sales plunged 45% in the first two months of the year. Additionally, Chrysler’s sales were down 36% to 10,368 units. Jeep’s sales declined 4% to 67,075, units. In contrast, Ram truck experienced sales growth in the month, up 24% thanks to robust sales of Ram’s new pickups (up 20%).
Performance of other automakers
Toyota Motor Corp. (TM, Financial) registered a 5.2% sales decline in February to 172,748 units. The sales decline is attributable to a decline in the sales of Tundra pickup trucks and Sienna minivans. Though sales of luxury Lexus brand surged 4.4%, a 6.3% sales drop of the Toyota division brought the overall sales of the company down.
Nissan (NSANY, Financial)'s sales dipped 12% in February. While sales at the Nissan Division were down 11.4%, Infiniti brand sales fell 17.3%. Rogue crossover sales dereased 16% from the same period last year. All these factors pulled the company’s overall monthly sales down.
Honda Motor Corp. (HMC, Financial) posted a meager sales plunge of 0.4% in February to 115,159 units primarily due to a decline in demand for its Pilot midsize SUV, down 8.8% in the month.
Last word
Per Edmunds.com, February sales plummeted 2.8% to 1.26 million units. The seasonally adjusted annualized sales rate has come down to 16.6 million, the lowest in 18 months. Charlie Chesbrough, senior economist at Cox Automotive, said: “The sales pace has finally shifted into a lower gear than the mid-17 million rate we finished 2018 with.”
The rising interest rates on car loans may possibly force consumers to postpone car purchases this year. The average interest rate on a new car loan totaled 6.26% in February, which was the highest in 10 years. Henceforth, analysts see car demand cooling off this year.
Disclosure: I do not hold any position in the stocks mentioned.
