Harvey soaks expectations for strong auto sales month
It was a mixed month for U.S. auto sales in August, with General Motors sales up for the month, Ford and Fiat Chrysler down, and flooding in Texas dampening hopes for an overall upturn.
Sales for General Motors Co. rose 7.5 percent in August over the same month in 2016, while Ford Motor Co. sales fell 2.1 percent and Fiat Chrysler Automobiles sales dropped 11 percent compared to the same month a year ago.
Kurt McNeil, U.S. vice president of sales operations for GM, said, “We had a very strong month, and grew our retail and commercial fleet business on the strength of robust crossover sales at all four of our brand. But our focus is on the unfolding crisis in Texas and what we can do to help our customers, employees, dealers and everyone else impacted by the flooding.”
Ford Motor Co.’s decline for August was due in part to a drop in SUV sales that had been strong through most of the year. Ford sold 209,897 vehicles last month, a decline going into the last quarter of a year when automakers have been unable to approach stellar sales performances in 2015 and 2016.
Though both Ford’s SUV and car segments slipped, the company sold 9.3 percent more trucks last month than it did in the same period a year ago, an almost monthly trend for Ford that couples with those customers opting for higher trim levels.
“We continue to see customers choosing high trim-level F-Series trucks for Super Duty and with new 2018 F- 150 orders,” Mark LaNeve, Ford vice president for U.S. marketing, sales and service, said in a statement. “We are seeing high demand overall for our F-Series lineup this year, outpacing full-size truck segment growth 2-to-1 with a 15 percent increase for August.”
Fiat Chrysler sold 176,033 vehicles for the month, with fleet sales down 23 percent due the company’s strategy of cutting sales to the daily rental market. But retail stories also were down – off 7 percent from a year ago. Inside those numbers, the Jeep Compass and Jeep Renegade scored their highest sales figures ever for August, as did the Dodge Challenger, Ram ProMaster and Ram ProMaster City.
Nissan saw a steep decline in August sales over last year, with the 108,326 vehicles sold in the month, representing a drop of 13 percent. American Honda Motor Inc.’s 146,015 vehicles sold last month were a loss of 2.4 percent.
Toyota had a better time of it, posting a gain of 6.8 percent with 227,625 sold. Volkswagen sold 32,015 vehicles to post an increase of 9 percent. And Subaru had its best month ever, moving 63,215 vehicles for a gain of 4.6 percent.
Industry analysts expect August sales for the industry to be undercut in part by Hurricane Harvey, which touched down last week in the country’s second-largest market.
Before the storm, analysts expected automakers to beat monthly numbers from a year ago for the first time in August. Days after the storm hit, they adjusted those numbers to reflect a roughly 2 percent decline industry-wide.
With an early look at the numbers, analysts noted rising inventory numbers that have, at least so far, not been addressed by dealers with a focus on incentives. Edmunds said new vehicles are remaining on dealer lots longer than any time since 2009.
Cars sat for an average of 77 days in August, an increase of two days from July.
“Labor Day weekend usually brings in nearly a third more buyers than the typical first weekend of the month, so this is critical opportunity to make a dent in inventory,” wrote Jessica Caldwell, Edmunds’ executive director of industry analysis. “Given the state of the market, we would usually expect automakers to pull out all the stops to get shoppers into their showrooms, but based on what we saw in August, it’s not a sure thing.”
Analysts have predicted a slowing of vehicle sales after several years of record numbers. Some segments have been hit hard than others. Consumers have consistently turned away from traditional sedans in favors of trucks and SUVs.
That’s due, in part, to rising fuel efficiency being met along the way by reduced gas prices. With the option of getting a larger SUV or crossover that can put them in the same mileage ballpark as sedans, consumers are going bigger.
Year-to-year comparisons are affected slightly by the calendar. This month provided dealers with an additional day of sales compared to August of 2016.
But Hurricane Harvey forced the closure of hundreds in dealerships in Southeast Texas over the past week, taking a bite out of sales there. Any loss due to Harvey could be made up in the coming months as consumers in the region look to put their lives back together.
Earlier this week, Jonathan Smoke, chief economist for Cox Automotive, estimated 300,000 to 500,000 cars and trucks could be lost due to the flooding. That figure comes from analyzing damages caused by hurricanes Katrina and Sandy, compared with vehicles per household and conditions in the Houston area.
If Smoke’s numbers are accurate, the damage would eclipse that of Sandy in 2012, which destroyed 250,000 vehicles.
“If Houston indeed lost 300,000 vehicles,” Smoke wrote, “it’s sobering to note that the entire Houston (market area) has seen 325,000 new vehicle sales in the last 12 months.”