Trucks, SUVs can't make up for shutdown as GM, FCA sales fall in 2020
Demand for pickup trucks and SUVs in the second half of 2020 could not make up for an eight-week pandemic-induced shutdown in the spring and flailing fleet sales in the months since.
Analysts watching the industry predict U.S. vehicle sales for 2020 will come in around 14.5 million vehicles. That's a decrease from 17.1 million cars, trucks and SUVs in 2019 and could be the lowest level since 2012.
General Motors Co. on Tuesday said its U.S. sales fell 11.8% from 2019. Meanwhile, Fiat Chrysler Automobiles NV's sales fell 17%, but its profit-heavy Jeep SUVs and Ram pickups and commercial vans made up a majority of sales, despite their sales falling 14% and 11% respectively from 2019.
Ford Motor Co. will detail its annual results Wednesday. Through November, the Dearborn-based Blue Oval's total vehicle sales were down 16.8% year-over-year — declines that may not necessarily be a bad thing for Ford and other automakers.
Lighter inventories and resilient demand — despite economic decline from the COVID-19 pandemic — have kept transaction prices high. Buyers are continuing to put significant money down to buy larger vehicles with the features they want because other such spending options as vacations and restaurants are not as available amid the virus outbreak.
"There are two markets here," said Jeff Schuster, vice president of global vehicle forecasting for LMC Automotive Ltd. "Those in the service, those that have really been significantly impacted, and then those that have shifted to working from home and continued with their employment. Those are the ones that are driving this push and recovery. What they are spending their money has shifted."
GM said its average transaction price for the year set a record at $39,229 and for the fourth quarter at $41,886. Its sales were up 4.8% year-over-year in the last three months of 2020, marking GM's best fourth quarter since 2007. Retail sales, it said, have returned to their pre-pandemic level after starting their recovery in May when auto plants reopened.
But with its best-selling vehicle, the Silverado, sitting at just 47 days of supply versus a 65-day industry average, there's room for growth: "No, we are not at pre-pandemic levels," said Michelle Krebs, executive analyst at Cox Automotive Inc.'s Autotrader. "We won’t be next year.
"There are a lot of headwinds at the start of this year. The pandemic is still raging, cases are on the upswing, and the vaccination rollout is slow at the moment. Things won't go back to normal until the pandemic is reined in and there is mass vaccination."
Buick sales fell 21.4% in 2020. Cadillac's fell 17.1%, Chevrolet's dropped 11.2%, and GMC's declined 8.8%. Chevy Silverado pickup truck sales rose 3.2%, and GMC Sierra sales were up 8.9%. All brands except Buick increased in October through December.
“Chevrolet, GMC and Cadillac set the bar high for these products in terms of technology, refinement and utility, and sales are exceeding our expectations,” Steve Carlisle, GM executive vice president and president for North America, said in a statement.
He highlighted the results of the Cadillac Escalade, GMC Yukon and Chevrolet Tahoe and Suburban full-size SUVs that launched this year in Arlington, Texas. Sales for all combined were down 19% for the year, but up 25% in the fourth quarter.
“We launched them on time despite the pandemic, and the team in Arlington is working around the clock to meet demand," Carlisle said. "We have quickly recaptured all the short-term gains our competitors made as we transitioned to the all-new models.”
At Fiat Chrysler, only Alfa Romeo increased its sales for 2020, up 2%. Chrysler's dropped 13%, Dodge's fell 37% and Fiat's plummeted 53%.
In the fourth quarter, FCA sales fell 8%. Although Ram had its best December for retail sales since it split from Dodge in 2010, total sales fell 5%. Jeep's declined 4%. Only Alfa Romeo and Chrysler saw an increase of 23% and 5% respectively.
"The economic indicators are pointing in the right direction for the start of 2021," said Jeff Kommor, FCA's head of U.S. sales, said in a statement. "Gas prices remain low; housing remains strong and consumers have access to credit.”
All of that is contributing to predictions that 2021 sales will fall between 15.3 million and 15.7 million vehicles and take a few more years before they reach 17 million again. Forecasters expect dealer inventories will continue to remain lean through the first six months of the year.
"The first part of the year is going to be really rough," Krebs said. "There's some pent-up demand both on the retail side and fleet side. But because the economy is stalled (from the pandemic), the recovery is stalled."
GM and FCA's annual declines were larger than some of their competitors. Toyota Motor Corp.'s U.S. sales fell 11.3% in 2020, though they surged in December by 20%.
Hyundai Motor Co.'s 2020 sales fell by 10% as it was hit hard by declines in rental car fleet sales. On the retail side alone, the Korean automaker was up 1.2%, powered by new SUVs like the three-row Palisade and subcompact Kona.
“In the month of December, our (sales) mix was over 70% SUV and 30% sedan which I believe is the highest it's been in quite some time,” Randy Parker, North American sales chief, said in an interview.
Still, Hyundai introduced two new cars this year as it remains bullish on a sedan market abandoned by Detroit automakers: “I’m thankful that Hyundai has stayed on the car side of the business. No matter what the market is, we've got a purse for every seat.”
The two Asian brands showed mixed results on electrified vehicles, which the industry has bet on for growth. Sales of Hyundai’s Ioniq sedan — the brand’s answer to Toyota’s Prius with hybrid, plug-in, and all-electric versions — dropped by 30% in 2020 to 13,570 units.
Toyota, on the other hand, saw its hybrid models grow to 16% of overall sales despite its Prius business plunging by 50% in four years. Hybrid versions of its popular RAV4 and Highlander SUVs have grown as customers have crossed over to crossovers.
Volkswagen AG's U.S. sales also dropped 10% in 2020, and Nissan Motor Co. Ltd.'s declined by 33.2%, signaling deepening trouble for the Japanese automaker.