Automakers unlikely to set a record with ’17 sales

Ian Thibodeau
The Detroit News

Near-record SUV and truck sales can’t overcome poor passenger-car sales and keep the industry on the record pace set a year ago in the United States. Yet analysts and automotive executives are quick to say business is good, even if the full-year results come up short of 2015 and 2016 records.

That’s partially because automakers are riding a cash wave as buyers abandon cars for bigger and more profitable vehicles.

Overall sales were down 3 percent for June compared to a year ago. For the first half of the year, the industry is off 2.1 percent compared to the same period a year ago with 8.45 million vehicles sold, according to Autodata Corp. Car sales industry-wide were down 11.4 percent year-to-date.

“June’s sales number reaffirms that the U.S. vehicle sales cycle is in a post-peak phase,” Charlie Chesbrough, senior economist and director of industry insights for Cox Automotive, said in a note Monday. “The U.S. economy remains strong — confidence is high, unemployment is low — and this will continue to support vehicle demand over the near-term. (We expect) 2017 light-vehicle sales to finish near 17.1 million — down from last year’s record, but still a robust market.”

The Detroit Three each saw sales slip in June compared to a year ago. Fiat Chrysler Automobiles was down 7.4 percent from a year ago; Ford Motor Co. was down 5 percent; and General Motors Co. was down 4.8 percent.

For the first six months of the year, Fiat Chrysler sales dropped 6.7 percent compared to mid-year 2016, with 1,067,362 vehicles sold. Ford dropped 3.8 percent year-to-date, having sold 1,294,397 vehicles in six months. GM was down 1.8 percent with 1,413,285 vehicles sold.

All three automakers saw steep drops in car sales in the first half of the year. GM’s were off 18.6 percent, Ford’s fell 20.2 percent and Fiat Chrysler’s fell 24 percent in that time.

Automakers sold a record 17.55 million vehicles in 2016, and it’s almost certain the companies will fall short of that this year. Several forecasters have recently trimmed 2017 estimates for sales of new cars and trucks.

The numbers on sedan sales are troubling enough that some analysts believe the time has arrived for automakers to consider whether some models should be discontinued. Rebecca Lindland, an executive analyst at Kelley Blue Book, said the downturn is reminiscent of what happened to minivans at one time.

Yet the minivan, with its sliding door, had a hook to keep buyers interested, and eventually, sales stabilized. Sedans, she said, have no such hook.

“It’s worthy of examination,” Lindland said. “Nobody makes the harder decisions better than (GM CEO) Mary Barra. And maybe (new Ford CEO) Jim Hackett is the kind that comes in and says ‘We need to a look at this.’ I think we’re in a time when some hard decisions have to be made.”

Ford said the June decline was driven largely by a 13.9 percent dive in fleet vehicle sales for the month coupled with continued falling passenger-car sales. Its retail sales on the month were flat, though.

Ford sold 227,166 vehicles in June. GM sold 242,873, and Fiat Chrysler 187,348.

“Obviously it looks like we hit a peak last year,” Mark LaNeve, Ford vice president of U.S. marketing, sales and service, said during a conference call with analysts and reporters. “That’s not to say it couldn’t play out differently for the balance of this year or even into ’18 ... but (expected annual sales near 17.5 million) is a very good industry. I’d take it all day long.”

GM’s drop came amid a strong showing in the crossover market. The Chevrolet Equinox in particular performed well, seeing an increase of 36 percent.

“U.S. total sales are moderating due to an industry-wide pull-back in daily rental sales, but key U.S. economic fundamentals clearly remain positive,” said Mustafa Mohatarem, GM chief economist.

Several Fiat Chrysler vehicles posted strong showings, including the Ram series and the popular Jeep Grand Cherokee; its sales rose 21 percent over 2016.

Ford remained optimistic about its truck and SUV sales. The Dearborn-based automaker moved 97,536 trucks and 77,712 SUVs in June, up 1.2 percent and 3.2 percent year-over-year, respectively. Ford managed to sell 77,895 F-Series trucks in June. For comparison, the company has sold 82,721 Focuses since the start of the year.

LaNeve said Ford’s F-Series had its best sales performance for the first half of the year since a record year in 2004, and Ford SUVs had the best-ever first-half performance, marking the first time the company has sold more than 400,000 SUVs.

He said that’s encouraging, given the three new SUV models Ford will roll out in 2018.

Some foreign automakers had a better month than the Detroit Three. Volkswagen of America Inc. sold 47,113 vehicles in June, a 10.8 percent increase. Meanwhile, Subaru’s 52,057 vehicles sold represented an 11.7 percent increase from 2016. Toyota Motor North American Inc. saw a more modest bump, with sales of 202,376 vehicles adding up to a 2.1 percent increase over 2016.

Analysts with Edmunds expect a “softening” market for 2017, with sales predicted to slip 2 percent compared to 2016’s record high. That would make 2017 the fourth-best sales year in U.S. history.

Cox Automotive analysts estimate that 17.1 million cars and trucks will be sold in the U.S. in 2017, followed by a drop to 16.7 million in 2018.

Twitter: @Ian_Thibodeau

Staff Writer Melissa Burden contributed.