Consumers in the U.S. are spending as the latest consumer confidence report shows, and they're spending on new cars, just not on American cars. The nation’s top two car makers reported a drop in sales.
As a whole, auto sales in the U.S. reached a seasonally-adjusted annualized rate of 17.05 million units - the third best showing since the recession. "The surge in new vehicle sales to above 17 million units in March suggests that the U.S. auto market remains healthy and that the weakness during the first two months of the year was largely weather-induced and temporary," according to TD economist Dina Ignjatovic.
General Motors reports sales are down 2% from a year ago, to 249,875 cars and trucks. The company said it was buoyed by the strength of fleet sales, going up against a weak retail market.
Ford took a bigger hit with sales falling 3.4% to 235,929. The company’s assessment was opposite of GM, saying its strong point was in the retail market.
Volkswagen Group of American continues its mixed bag. Sales of the namesake brand fell 7.5%, while the Audi brand jumped 20% and has already sold twice as many vehicles as its sibling.
Bucking the trend was Fiat Chrysler Automobiles U.S. Its sales rose 1.7% to 197.261 vehicles, lining up with economists’ estimates. The company said its Jeep line was up about 23%. The gain makes 60 straight months of year-to-year gains for the company, according to Reuters.
Foreign car makers fared better, Hyundai led the way along with Nissan, Subaru, Toyota and Mercedes all recording higher sales.
Analysts had predicted a drop in industry volume of about 1% with an expected rise from the seasonally adjusted sales rate.
Transaction prices were higher led by a big demand for pickup trucks and utility vehicles. GM and Ford both saw higher sales in that segment while sales of FCA’s Ram line declined. Truecar.com puts the average price for a new vehicle in March at $32,201, up 2.1% year over year.
Both GM and Ford said they’re upping production on their truck lines. Ford says it’s had a tough time keeping its new all aluminum body pick-ups in stock.
The current state of the American economy, should mean a good year for automakers, said Ignjatovic, "Indeed, the outlook for auto sales remains quite bright. On the consumer side, employment is rising at the fastest pace in 15 years, lower gasoline prices are putting more cash in consumers' pockets, and household finances continue to improve. Meanwhile, ultra-low interest rates and longer loan terms are keeping affordability high. These factors combined should help bring consumers into showrooms."