Carmakers post sales decline for fifth straight month

Melissa Burden and Jim Lynch
The Detroit News

As car sales cool and industry demand softens, automakers in May for the fifth straight month posted a sales decline compared to the same month a year ago.

Industry new-vehicle sales in May fell 0.5 percent in the United States to 1.52 million, despite an extra selling day compared to a year ago, according to Autodata Corp. And with vehicle sales down 2 percent through the first five months of the year, some automakers and analysts are revising downward their robust sales forecasts that now appear will fall short of last year’s 17.55 million sales record.

Analysts like ALG’s Eric Lyman have downgraded 2017 industry sales projections from 17.4 million to 17.2 million vehicles. But to hit that level, the coming months — particularly the summer months — will have to be stronger than what 2017 has shown so far. Lyman believes dealers will continue to offer deals to reduce the backlog of cars on their lots.

“It looks like they’ll have to continue those high levels of incentives until the inventories are cleared out …,” he said. “So now is kind of a good time to buy new.”

Passenger cars represented just 38.4 percent of industry sales last month, down from 42.2 percent in May 2016. Truck sales including SUVs, rose 6 percent to represent 61.6 percent of industry sales last month.

General Motors Co. and Fiat Chrysler Automobiles NV each had sales declines in May, but Ford Motor Co. posted a 2.3 percent sales increase, surprising some analysts. And its 240,250 vehicle sales tally topped GM’s monthly sales in May — a rare occurrence.

Ford attributed the gain in part to an increase in fleet sales, including a 2.7 percent increase in sales to rental car companies from May 2016.

Sales of vehicles to fleet customers can vary because of timing of orders and deliveries, Mark LaNeve, Ford vice president of U.S. marketing, sales and service, told analysts and reporters in a conference call. Ford expects its fleet sales will fall in June.

The last time Ford outsold GM was in March 2016. LaNeve said when that does happen, it’s usually related to fleet timing.

“It happens once in awhile,” LaNeve said. “We don’t pay much attention to it.”

Ford said its truck sales rose 9.4 percent in the month, while SUV sales increased 4.3 percent and car sales slid 10 percent. F-Series truck sales totaled 76,027 last month, up 12.8 percent from May 2016. It marked the best May results in 13 years.

GM has been focused for a few years on trimming its fleet sales to rental car companies in favor of more profitable sales to retail customers. GM’s sales to daily rental companies last month was down 36 percent from a year ago, or more than 8,100 vehicles.

Analysts said May’s sales numbers reinforce a pair of trends underway: the leveling-off of overall sales and the continued waning of consumer interest in traditional sedans. Despite that, some expect the industry to still finish the year with sales of just over the 17 million mark.

“But if we see additional softening over the rest of the year, we may see sales wind up in the high 16 million range,” said Alec Gutierrez, a senior analyst with Kelley Blue Book, in a call with reporters. “A performance in the high 16-million range is still very, very strong. ... But coming off record numbers of 17.5 million units in the last two years, it’s certainly not at the record pace we’ve seen.”

GM said its May sales fell 1.4 percent to 237,156 vehicles compared to the same month a year ago. The automaker said its car sales fell 11.5 percent year-over-year, while truck sales slipped 3.7 percent. Crossover sales increased 15 percent from the same month a year ago.

Meanwhile, Fiat Chrysler Automobiles NV reported a 0.9 percent drop in May over last year with sales of 193,040 vehicles. FCA saw mixed results across its lineup. Jeep sales dropped 14.7 percent, while Ram Trucks jumped 18.2 percent. The Chrysler brand sales dropped 1.8 percent, while Dodge rose 8.4 percent. Fiat sales dipped 15.8 percent.

Results across the rest of the industry were mixed, with Toyota, Hyundai and Kia posting sales declines and Volkswagen, Nissan and Honda seeing increases in May.

Some automakers and analysts have scaled back their expectations for the year, amid high inventory levels and incentives. LMC Automotive trimmed its forecast of retail sales this year to 13.9 million vehicles as it expects a slowdown to continue in the second half of the year. The company and J.D. Power said last month that on average, it was taking more than 70 days for vehicles to clear dealer lots for the first time since 2009.

Ford said it was sticking to its forecast of 17.7 million sales for 2017, including medium-duty and heavy-duty trucks. The automaker indicated that sales in the second half of last year were stronger than the first six months of the year. GM, however, indicated the sales pace is softer than what it had expected earlier in the year.

“The U.S. economy is operating at near full employment levels, wages are rising, interest rates and fuel prices remain low and consumer confidence remains high,” GM Chief Economist Mustafa Mohatarem, said in a statement. “The decline in total sales is primarily due to the industry’s pull back from daily rental sales. Although total sales are running below our expectations, we anticipate retail vehicle sales will remain strong.”

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