FCA, Ford ride strong truck, SUV sales in May

Ian Thibodeau
The Detroit News

Fiat Chrysler Automobiles NV and Ford Motor Co. reported better-than-expected U.S. sales increases in May, driven entirely by the automakers' trucks and SUVs as consumers continue to ditch passenger cars in favor of larger vehicles. General Motors Co., which no longer reports monthly sales figures, is also estimated to have a strong month.

Analysts had forecast strong May U.S. sales across the industry due to Memorial Day weekend dealer sales.

Sales of Ford's F-Series trucks were up 11.3 percent in May, marketing 13 straight months of year-over-year sales increases.

With Ford and Fiat Chrysler reporting double-digit percentage increases for the F-Series and Jeep brands, consumers' desire for trucks and SUVs appears to have overshadowed rising fuel costs. Strong SUV and truck sales are driving up average transaction prices for the industry as new-vehicle sales normalize following a few years of record numbers.

"Despite rising transaction prices and higher fuel costs, the new vehicle market remains strong," Karl Brauer, executive publisher for analysis companies Autotrader and Kelley Blue Book. "Consumers continue to buy trucks and SUVs at an accelerated pace, more than offsetting the ongoing drop in car sales. Economic indicators suggest we’ll see this trend throughout the summer and fall, though talk of tariffs and the specter of $4-plus-a-gallon fuel could end the party, and inventory levels remain relatively high at several automakers."

The Wrangler and other models in the Jeep garage carried Fiat Chrysler to a good month.

Fiat Chrysler's May U.S. sales rose 11 percent, while Ford's overall sales increased less than 1 percent compared to the same month a year ago. Both companies beat analyst expectations. GM announced in April it would no longer report sales every month, and will instead report sales quarterly.

Analysts at Edmunds.com estimate that GM sales were up 11.7 percent for the month, with an estimated 265,030 vehicles sold. The Detroit automaker won't report its sales figures until July 3 as a quarterly number.

Jeep was king for Fiat Chrysler in May. The automaker moved 97,287 Jeep vehicles in the U.S., up 29 percent, and the Wrangler model saw a 26 percent increase in sales, marking its best May ever with 25,102 vehicles sold.

Toyota Motor North America reported its U.S. sales slipped 1.3 percent in May. The automakers' car sales slipped 11 percent overall. Truck sales were up 5.8 percent for the automaker.

Ram retail sales increased by 18 percent last month, sales volume for both fleet and retail was only up 2 percent. The Chrysler brand tumbled 18 percent, the Fiat brand plummeted 46 percent, and the Dodge brand saw a 4 percent increase.

The Jeep and Ram brands are the focus of the company's new five-year forecast presented Friday by CEO Sergio Marchionne in Balocco, Italy. The automaker moved 214,294 vehicles in the U.S. in May 2018.

Ford meantime saw fleet sales drop 4.6 percent in May. The company's retail sales increased 3.5 percent compared to a year ago. Ford's truck sales went up 9.4 percent, and its SUV sales increased less than a percentage point. Ford passenger car sales meanwhile slid 13.3 percent.

The Blue Oval again pointed to the strength of its F-Series trucks, sales of which went up 11.3 percent in May, marketing 13 straight months of year-over-year sales increases. The truck brand posted its best May sales performance since 2000, the company reported. 

Retail sales of the Expedition also increased 41.8 percent. The hulking SUV sits on dealer lots for an average of 19 days, low for an auto industry that likes to keep days' supply at least double that amount.

“F-Series didn’t miss a beat last month," Mark LaNeve, Ford vice president of U.S. marketing, sales and service, said. And "the move into SUVs out of cars is accelerating."

That has analysis companies keeping a closer eye on the average price of vehicles, and the interest rates buyers are taking on loans to buy those vehicles.

Loan interest rates reached highs not seen since 2009, according to California-based industry analysis company Edmunds. The annual percentage rate on new financed vehicles averaged 5.75 percent in May, compared to 5.04 percent in May 2017 and 4.17 percent in May 2013, according to Edmunds.

The company forecast the entire industry would report selling 1,565,683 new vehicles in the U.S. in May, a 3.5 percent increase over the same month a year ago.

Analysis company Kelley Blue Book reported new-vehicle average transaction prices jumped 3.4 percent over May 2017. That's good for the automotive industry – through likely bad for consumers, as it could indicate the cost of vehicles is increasing.

But Edmunds expects the spike in auto loan interests rates could be beneficial in the short term.

"Higher interest rates appear to be incentivizing car shoppers, which is likely why we’ve seen stronger than expected sales so far this year,” Jeremy Acevedo, Edmunds' manager of industry analysis, said in a statement. “Since interest rates have been creeping up all year, shoppers are likely thinking it’s better to buy now before rates get any higher. However, this is likely a temporary pull-ahead effect, and could come back to bite automakers later in the year."

The auto industry is expected to see sales decline this year after record years in 2015, 2016 and a near-record in 2017. Average transaction price is expected to increase, driven largely by truck and SUV sales.

“Depending on how shoppers respond, this could set the trend for even sweeter deals as we head deeper into the year," Acevedo said.


Twitter: @Ian_Thibodeau