In July, the US Detroit automaker saw a decline in their sales, reflecting a view that the light-vehicle market has slipped after six straight annual volume increases. All thee giant US automakers failed to meet analysts’ expectations. Following the release of monthly sales data, shares of the three automaker tumbled more than 4%.The analysts expected July sales, on an annualized basis, to come in between 17.5 million to 18.1 million vehicles.
The major reason for this decline was the continuation of consumer trend of shunning passenger cars and opting more for SUVs and pickup trucks.
General Motors Company
The US largest automaker, General Motors Company (NYSE:GM), which has recently started to focus more on retail buyers, reported a fall in sales during July. This was marked as the sixth month in a row when the giant car maker saw decline in its market share. GM sales tumbled 2% to 267,258 vehicles, at the low end of analysts' prediction.
In the recent press release, the company notified that it has delivered 236,235 vehicles last month to individuals or “retail” customers, reflecting a 5% surge year-over-year (YoY). This was mainly backed by sales increase at Chevrolet, GMC, Buick, and Cadillac.
According to the company, as a part of its retail focused strategy of concentrating on more lucrative retail sales, it continued to cut daily rental deliveries as per its plan. Through July, the company’s daily rental deliveries are down 38% as compared to a year ago.
During the month, sales of two main pickup trucks, which are its two best-selling models, the Chevrolet Silverado and the GMC Sierra, increased nearly 0.6%. Apart from this, sales of the third best-selling model, the Chevy Traverse SUV, jumped 20%.
Year-to-date, the company’s average transaction prices (ATPs), which represents retail transaction prices after sales incentives, $34,887, nearly $4,100 more than the industry average and $1,100 above last year same month’s price.
Kurt McNeil, US vice president of Sales Operation said in the press release: “Our retail-focused plan is working and as availability of our new cars, trucks and crossovers continues to grow, we expect to keep our retail sales momentum going and our strong margins intact.”
Mustafa Mohatarem, GM’s chief economist stated: “Low interest rates, full employment, stable fuel prices and increasing wages remain in place and these positive factors continue to point toward a strong second half of the year and another potential record year for the industry.”
Last month, GM’s president of North America informed that he is expecting new vehicle sales to remain robust in the US through the latter half of 2016 and is anticipated to come close to last year’s industry record of 17.5 million.
During the same time, Mr. Batey said that he is fully committed to the giant automaker’s strategy of placing retail sales ahead of daily rental fleet sales. Usually, sales made to individual customers by dealers bring more profits than bulk sales of models that we normally see at airport rental lots. However, the latter option tend to be mainly less optional equipment and lower trim levels than what many of the customers pick in the showroom.
Ford Motor Company
Ford US sales in July were down 3% YoY to 216,479 vehicles. This decline includes an unexpected 1% fall in pickup truck sales. Though there was an increase of 6% in fleet sales, but this growth was not sufficient to offset 6% dip in its retail sales.
According to July sales data, all of the four top-selling Ford Models have lost ground, which includes its Explorer SUV that has plunged 22%. Its compact SUV Escape sales plummeted 10%, while sales of its F-series pickup tumbled 1%.
Ford vice president, US Marketing, Sales and Service, Mark LaNeve said: “Trucks and vans continue to be market strengths for Ford, van customers rewarded us with another strong year-over-year gain, and F-Series had its best retail sales this year.”
During the month, Ford’s overall transaction prices went up $1,600 as compared to a year back due to continued higher mix shift to SUVs and trucks. This increase was almost more than double the industry average.
In the press release, Blue Oval mentioned that sales of its newest product, Lincoln surged 2% in July. Sales of its Lincoln MKZ soared 12%, while sales of Lincoln MKX increased 5%.
Fiat Chrysler Automobiles NV
Another Detroit automaker, Fiat Chrysler reported that its US auto sales rose 0.3% to 180,727 in July as compared to a year ago sales figure of 180,124 units. Analysts projected sales increase of 1.9%.
In July, Fiat’s US retail sales were down 2%, while its fleet sales grew 22% YoY. The automaker’s Jeep and Ram Truck brands sales climbed 5% during the month as compared to July last year. Apart from this, it’s Jeep Renegade, Jeep Grand Cherokee, Jeep Compass, and Jeep Patriot posted sales gains in July versus July 2015, as did the Ram pickup truck along with Ram ProMaster and Ram ProMaster City vans. Two Dodge brand models – the Dodge Grand Caravan and the Dodge Challenger – also saw sales gains in July YoY. Sales of the Fiat 500X were up YoY as well.
The chart below shows the market share of these three US automakers in July this year. During the reported month, GM, Ford, and Fiat’s market share was 17.6%, 14.1%, and 11.7%, respectively. Year-to-date, GM has the largest market share of 16.8%, followed by Ford with 15.3% and Fiat Chrysler with 12.9%.
According to Mr. Mohatarem, though light vehicle sales was one of the prominent factor of US auto sales growth in recent times, but the recent growth is completely supported by sales to fleet customers, which includes sales made to rental car firms, commercial clients, and government agencies.