The traditional Detroit automakers and Nissan Motor Co. all reported U.S. vehicle sales for August that missed analysts’ estimates, increasing the odds that industrywide sales won’t extend a streak of annual records.
Ford Motor Co. and General Motors Co. posted bigger-than-expected declines as they sold fewer discounted models to fleet buyers while pickups and sport utility vehicles — important because of their high profit margins — experienced a rare decline. Fiat Chrysler Automobiles NV had a 3.1% gain and yet still fell short of predictions.
The first wave of automakers’ results reinforce the idea that the companies aren’t doing deep discounts to chase sales, the practice that helped force GM and Chrysler to restructure through bankruptcy in 2009. Even so, another batch of discounts may emerge this month to clear out inventory of the outgoing models, said Jessica Caldwell, an analyst at Edmunds.com.
“It wasn’t exactly a blockbuster month in August, so that puts extra pressure on the industry to step up its game in September, especially this coming Labor Day weekend,” Caldwell said in an e-mailed statement. “We’re at a critical time where dealers need to clear out 2016 inventory to make room for 2017s.”
August reports arriving on Thursday may show a seasonally-adjusted annual sales pace of about 17.2 million cars and light trucks, according to a Bloomberg survey of analysts, down from a 17.9 million rate in July that was the highest of the year. Incentives were lower than in July, when GM offered 20% cash back on several Chevrolet models, according to vehicle-shopping website TrueCar. GM also projects a 17.2 million pace for August, bringing the year-to-date selling rate to 17.3 million.
Sales of Ford’s F-Series pickups, the top selling vehicle line in America, fell, as did Explorer SUV deliveries. Car sales plunged 25% as low fuel prices continued to steer buyers into SUVs and trucks. Overall, its sales excluding heavy trucks fell 8.8%, more than the predicted 8.2% drop.
GM sales fell 5.2% in August, a little steeper than the 4.9% drop that analysts projected. Deliveries fell for its highly profitable large pickups, the Chevrolet Silverado and GMC Sierra.
Fiat Chrysler said sales of its Ram pickup slipped 0.2%, smaller than declines GM and Ford reported for their full-size trucks.
Nissan sales fell 6.5%, with drops for both its namesake brand and the Infiniti premium brand. The Nissan brand set an August record for sales of crossovers, SUVs and pickups with a 19% gain. Sales of the Frontier midsize pickup more than doubled while Murano crossover deliveries jumped 29%.
GM’s decline was due in part to a drop in fleet sales, which spokesman Jim Cain said were down 4.4% in the month, and a reduction in sales incentives. For the year, average transaction prices have increased by $2,500, it said in a statement.
Better Pricing, More Cushion
Ford said its sales to fleet buyers fell 10% last month, while retail sales to individual customers were off by 8%. Despite the drop, average prices continued to climb, which support profits even if industrywide sales were to fall this year for the first time in seven years.
“Strong sales of high-end Lincoln vehicles and Ford SUVs also helped us continue outpacing the industry in average transaction pricing, which increased $1,200 versus a year ago,” Mark LaNeve, Ford’s U.S. sales chief, said in a statement. Sales of the Lincoln MKX SUV rose 50% last month.
While discounts have, at least on paper, crept back up to pre-recession levels, there’s more cushion than ever: Transaction prices are at a record high as buyers opt for bigger vehicles with nicer interiors, electronics and driver-assist features. With that profit protection, carmakers don’t mind if the industry snaps a record streak of sales increases.
The discipline is helping the industry stay profitable while it’s still backed by strong, if weakening, underlying trends: low unemployment, available credit, high equity valuations, cheap gasoline. Consumer confidence jumped this month, the Conference Board reported this week, beating estimates and rising to the highest level in almost a year.
Even so, that has failed to inspire investors, who have been preoccupied with the lack of growth in the U.S. market and potential disruption to the industry from new technology, new entrants and new concepts of personal mobility. While the Standard & Poor’s 500 Index gained 6.2% this year through Wednesday, GM lost 6.1%, Ford fell 11% and Fiat Chrysler Automobiles NV plunged 27%. And it’s not just the traditional U.S. automakers under pressure from investors: Toyota Motor Corp., Daimler AG and BMW AG have all dropped 17% or more in 2016.
With the discounts eased, industrywide sales may have fallen about 3.5% in August, according to the average estimate in the Bloomberg survey. Projected declines include a 6.6% drop for Volkswagen AG’s VW and Audi brands.
Only Fiat Chrysler among the biggest automakers was projected to report more than a 1% gain. The average estimate for a 5% increase is the result of calculations based on the revised year-earlier result. Facing a dealer lawsuit and a federal probe into its sales-reporting practices, the company restated its sales results from January 2011 to June 2016. Under the new practices, the August 2015 tally is 190,887 — 10,785 fewer than originally reported, making for an easier comparison.
By Keith Naughton and David Welch, with assistance from John Lippert.