U.S. auto sales driving toward another record year

Michael Wayland
The Detroit News

Halfway through 2016, the U.S. auto industry is on pace for a second consecutive year of record sales; however, growth is slowing.

New car and truck sales in the United States through June were up 1.5 percent compared with the first six months of 2015 to more than 8.6 million, including a 2.5 percent increase of 1.5 million sold in June, according to Autodata Corp.

The sales are being driven by hot-selling pickups, sport utility vehicles and crossovers. Through the first half of the year, light-duty trucks, which include some SUVs and crossovers, accounted for about 58 percent of sales, up 4 percentage points from the first half of 2015. Passenger car sales are down 7.5 percent through June.

As industry growth slows, experts say double-digit, year-over-year sales increases for automakers will continue to be elusive, after several automakers reported record-setting figures for the second half of 2015.

“In 2015, it was really the second half of the year — starting in July — that sales really turned on,” said Jessica Caldwell, director of industry analysis for Edmunds.com. “This is really where we’re going to make or break for 2016.”

No mainstream automaker through the first half of 2016 has experienced double-digit sales increases. Nissan Motor Co. is the closest, with sales up 8.4 percent, followed by Fiat Chrysler Automobiles NV at 6.5 percent and Kia Motors Corp. up 5.6 percent.

“We are not going to see the giant year-over-year increases, but the market still remains healthy,” said Michelle Krebs, Autotrader.com senior analyst.

Luxury automakers Volvo Group and Jaguar Land Rover are the only major carmakers to achieve double-digit gains through June, posting increases of 24.8 percent and 18.7 percent, respectively.

Industry experts forecast automakers will sell between 17.5 million and 18.1 million vehicles this year, besting last year’s 17.47 million vehicles, which broke the record of 17.41 million set in 2000.

KBB senior analyst Alec Gutierrez said despite risks and some uncertainty in the global marketplace following England’s decision to leave the European Union last week, he’s bullish on another record year for the industry.

“Is there a chance we miss a record year this year? Most definitely there’s a possibility,” he said. “I don’t see a ton of risk factors pointing to us missing the mark this year.”

Heading into the second half of the year, several automakers have experienced sales declines, including Toyota Motor Corp. (-2.7 percent), Volkswagen Group (-8.4 percent), Mazda Motor Corp. (-8.6 percent) and General Motors Co.

GM — down 4.4 percent through June — has continually said its sales declines have been the result of a “retail-focused strategy.”

“Our reduction in daily rental deliveries, disciplined incentive spending and well-managed inventories are showing real benefit in the residual values of our latest launched vehicles,” Kurt McNeil, U.S. vice president of sales operations, said in a statement.

However Detroit’s largest automaker this year also has faced production hitches at several plants, which cut into supply of popular sellers.

Gains at Ford, Fiat Chrysler

For June, Ford and Fiat Chrysler reported healthy sales increases of nearly 7 percent, while GM experienced a slight decline.

GM reported sales dropped 1.6 percent last month compared with June 2015. Ford and Fiat Chrysler reported increases of 6.4 percent and 6.5 percent, respectively.

“In spite of some severe stock market volatility in June, the American consumer stayed focus on buying new vehicles and propelled FCA to six vehicle sales records last month,” Reid Bigland, Fiat Chrysler’s senior vice president for sales in North America, said in a statement.

Fiat Chrysler’s Jeep, Dodge and Ram Truck brands each posted year-over-year sales gains for the month, driving the automaker to its best June sales in 11 years. The Chrysler and Fiat brands experienced declines of about 20 percent and 19 percent last month, respectively.

Ford’s sales were driven by a 24.2 percent increase in overall truck sales, including a 28.6 percent rise for its profit-generating F-Series trucks. Ford’s SUV sales rose 7.3 percent, while car sales fell 12.1 percent. Lincoln brand sales rose 5.8 percent.

Through the first six months of the year, Ford’s sales are up 5 percent, marking its best first-half performance since 2006. Ford’s truck and van sales are up 13 percent through the first six months of the year compared with the first half of 2015, while SUV sales were up 9 percent, for their best first half ever.

Ford’s SUV sales have been helped by a recently refreshed Escape, which saw a 20.2 percent sales increase in June.

“Strong customer demand has helped us continue growing our truck leadership position, further widening the gap with our nearest competitor versus last year,” Mark LaNeve, Ford vice president of U.S. marketing, sales and service, said in a statement. “Consumer demand for Ford SUVs also continues to surge to all-time highs, allowing us to introduce new levels of capability, versatility and technology to a whole new generation of SUV fans."

Effects of the Brexit

Despite the fallout in global financial markets from England’s referendum on leaving leave the European Union, analysts forecast U.S. new vehicle sales to rise between 1 percent and 5 percent in June

Those same experts don’t see the Brexit heavily influencing sales in the United States in the short-term, however automakers such as Ford are closely monitoring the events.

“We continue to, as all of you also do, to digest the broader implications of the U.K. referendum that took place one week ago now,” said Ford Chief Economist Emily Kolinski Morris.

IHS Automotive on Friday said it dropped its global production forecast nearly 2.6 million units through 2018, due to the Brexit.

IHS said its analysis is based on a simulation of the changes to the global sales forecast applied to the June light vehicle production forecast.


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Twitter: @MikeWayland

Staff Writer Michael Martinez contributed.