Coverage: New car sales slump in March
The U.S. auto industry turned in an underwhelming performance in March as sales disappointed despite rising discounts.
Nathan Bomey of USA Today had the news:
The industry reported sales of 1.56 million vehicles for the month, down 1.6% from a year earlier, according to Autodata, amid increasing inventories of unsold vehicles, especially of small cars. Sales analysts for Edmunds.com’s, Kelley Blue Book’s and TrueCar subsidiary ALG’s had all expected a modest upturn.
In the face of declining sales, now it’s up to automakers to see if they can pare production of slow-selling models and reduce the profit-crushing practice of having to offer heavy discounts to clear out the backlog. Sales incentives rose 13.4% in March, compared to a year earlier, to an average of $3,511 per vehicle, according to ALG.
“Going forward we’ll see automakers likely cut production to manage inventories and to not go out of control with incentives,” Autotrader analyst Michelle Krebs said.
Overall, General Motors, the largest seller of U.S. vehicles, recorded a 1.5% sales increase but missed expectations of a much larger uptick. The company’s inventory level rose to 98 days supply, up from 71 days a year earlier and symbolizing the industry’s challenges.
Mack Hogan of CNBC reported that SUV sales continued to be strong:
Wall Street pegs Jeep as Fiat Chrysler’s most valuable brand, with the SUV maker serving as a profit center for a company that has typically struggled to make inroads in small cars. Despite market headwinds pushing toward crossovers and SUVs, Jeep still delivered 11 percent fewer vehicles this March.
GM benefited from recently introduced crossovers and SUVs that buoyed sales to 1.9 percent above their March 2016 levels. The crossover lineup saw a 21 percent boost in retail sales, while trucks were up 0.5 percent.
“Chevrolet will have the industry’s broadest and freshest lineup of utility vehicles led by the all-new 2018 Equinox and Traverse, plus we have a unique three-truck pickup strategy and a dominant position in large SUVs,” Kurt McNeil, U.S. vice president of sales operations, said in a statement.
The company didn’t report how much car sales grew in March, besides saying that Chevrolet had a 9 percent increase in retail sales.
The American auto giant also increased its control of the market, with market share up 0.3 percent to a GM-estimated 16.7 percent.
Ian Thibodeau and Jim Lynch of the Detroit News noted it’s the third consecutive monthly drop after a record 2016:
“We’ve been saying for some time that U.S. sales have plateaued at a very high level,” said Michelle Krebs, an executive analyst for Autotrader. “March seems to prove that out. Sales are coming in strong, but softening as we anticipated. But, again, it’s still at a very high level.”
Stephanie Brinley, senior automotive analyst, IHS Markit, says the introduction of new SUVs throughout the year should keep sales strong: “These vehicles will continue to drive the story of increasing popularity of utility vehicles and maintain pressure on car sales.”
Sales of trucks and SUV sales did drive overall increases for some automakers in March, including General Motors Co., which had a 1.5 percent overall boost in March.
GM sales totaled 256,007 vehicles in March, coming in under forecast. But that figure was still higher than the same month a year ago, and an increase over February 2017.
GM’s Buick sales jumped 15.1 percent compared to a year ago, with 20,957 sold. Chevrolet brand sales slipped 2.3 percent, with Impala and Malibu sales off by 23 percent and 36 percent, respectively. GMC sales grew by 12 percent, and Cadillac sales dropped 1.5 percent compared to a year ago.