Ford Wednesday reported a almost 6% decline in USA auto sales – which was a steeper decline than some analysts were expecting.
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The results have fueled concerns that the United States market might have reached a plateau, with demand for new cars cooling off faster than what most analysts had forecast. But last month, US auto sales were expected to drop 6 per cent to 1.53 million cars and trucks, according to vehicle shopping site Kelley Blue Book. F-Series pickup sales rose 9 percent and van sales had their best May since 1978, aided by the full-size Transit.
In the morning, sales reports, particularly GM’s, spooked investors on the lookout for weakness in the cyclical auto industry, which has been on an upswing since the Great Recession. Year-to-date, GM has the largest market share of 16.6%, followed by Ford with 15.5%, and Fiat Chrysler with 13.2%. The broader S&P 500 and Dow Jones Industrial Average were up less than 0.1 percent.
GM, which sold 240,450 vehicles in May, blamed it on a short sales month, tight supplies of new models such as the Chevrolet Cruze and Chevrolet Malibu and its continued cutback of sales to rental fleets.
This May also had one less weekend than last May, which could account for some of the decline.
“So while the pace is now 0.3mn below our full-year forecast of 17.6mn, sales are still tracking up modestly yoy (similar to our forecast of +0.6% US SAAR growth yoy in 2016)”, analyst Patrick Archambault wrote in a note. Created to replace the outdated SRX in Cadillac’s market, the XT5 has been very slow to reach dealer lots even though luxury crossover SUVs are among the most in-demand vehicles amid gasoline prices that are at a decade low, according to AAA.
Auto sales have enjoyed years of consistent growth – thanks to the broader availability of financing and pent-up demand from consumers after the lean years of the Great Recession, among other reasons.
Industrywide, trucks and SUVs remained the US industry’s best sellers, to the detriment of traditional sedans.
Automakers are offering more discounts in order to keep growing their U.S. market share. Sales of Ford’s Lincoln luxury brand rose 6.9 percent.
Fiat Chrysler and Subaru bucked the trend, with sales up 1 percent each.
Edmunds.com said sales would be down 5.8 percent from a year earlier, while fellow industry consultancy TrueCar estimated a 4 percent decline.
A year ago, the Cruze compact sedan was GM’s top-selling vehicle, but its sales fell 30 percent in May.
General Motors Co.’s sales fell 18 per cent from last May, while Ford Motor’s were down six per cent. Nissan brand light-truck sales set a May record, with Rogue crossover sales rising 5.9 percent.
Shoppers spurned some of the largest automakers in May, with Toyota and GM sales down 9.6 percent and 18 percent, respectively. Ford shares dropped 2.8 percent, closing at $13.11. “ORCRP010868-topic.html” class=”local_link” >Nissan matched predictions with a 1 percent drop. The company was the only major automaker in the USA market for which analysts had not expected a decline.
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LaNeve especially was encouraged by the F-Series, noting strong truck sales in the first half of the year bode well for the second half when truck demand typically grows.
