U.S. Car Sales Slide In October
General Motors appears to have won the October sales race among the big automakers. GM saw its sales fall by just 1.7 percent in October. It has good company in those sales declines, being joined by nearly all the other carmakers. Overall, automobile sales in the U.S. are expected to drop between 6 and 8 percent when all the reports are in.
Actually, the list of car companies with sales increases is easy enough to list: Hyundai-Kia, Subaru, Tesla, Jaguar Land Rover and Mitsubishi.
Industry sales were down in October, but Karl Brauer with Cox Media says there were a number of mitigating factors that make October sales look less disappointing. First, he says, "October of 2015 was one of the highest sales months in the history of the industry, so being 'down' compared to last year was almost inevitable."
The second factor: There were two fewer selling days in October 2016 versus 2015, Brauer says, along with an East Coast hurricane impacting sales in that region. Through that filter, the annual rate of sales as of October being 17.7 million vehicles was not bad. Brauer says, "If this is what a 'down' market looks like, I'm betting most automakers will gladly take it."
October sales point toward the growing trend of consumers moving away from sedans and toward SUVs. SUVs and trucks have the benefit of being more profitable for carmakers. Adrienne Roberts of the Wall Street Journal has this analysis of why the drop in sedan sales isn't all bad for the automakers:
"Auto makers, however, are eager to follow the migration to heavier vehicles, which command higher price tags and deliver bigger profits in the U.S. at a time when several other global markets are under pressure and development costs are rising due to regulations and a move to more autonomous vehicles. In a report released Monday by the Ann Arbor, Mich.-based Center for Automotive Research, researchers estimate every light truck sold in the U.S. generates an average of $6,000 in operating profit for its manufacturer.
"Detroit's Big 3 are best known in the truck market, but they are facing stiffening competition. For instance, Nissan Motor Co.'s U.S. Sales Chief Judy Wheeler said key light trucks in its lineup, such as the Pathfinder SUV or Titan pickup, registered double-digit sales increases in the month of October compared with the same month last year.
"The gains helped the Japanese auto maker dramatically shift its reliance off lower-margin cars, such as the Altima, which require higher incentives relative to their sticker price. While acknowledging Nissan still has work to do, Ms. Wheeler noted trucks have gone from 40% of the auto maker's U.S. sales mix recently to well over 50% in October."
Sales Highlights For American Companies
Ford was the only carmaker that didn't report its sales figures. The company says it is delaying the release, after a fire at the company's headquarters in Dearborn, Mich., on Monday. Ford sales are expected to be down.
GM exceeded expectations as it saw sales of its SUVs, trucks and crossovers helping the company offset the fall in sedan sales. Michael Harley of Kelley Blue Book says that although sales were down overall, GM increased sales to retail customers (regular consumers, not fleets or rental car companies). He points out that GM is showing strength that would have been unheard of a decade ago. Harley says the company "improved retail market share and set an all-time October record for the brand's average transaction price ― measurements that show strength amid an industry that is struggling with slowing sales."
Fiat Chrysler Automobiles saw its sales go down by 10 percent. The company's Chrysler brand was down nearly 45 percent. The company had two bright spots: Ram and Maserati. Ram was helped by its truck offerings. Maserati, the Italian luxury brand, increased sales by nearly 12 percent, meaning it sold 1,304 cars as opposed to 1,165 this time last year.
It's easy to lose sight of how far we have come from six years ago.
Tesla was up by 4 percent. The company sold 2,250 cars in October; it has a goal of selling 500,000 vehicles within the next few years. The company showed a profit of $22 million. This comes while Tesla's CEO embarks on projects as varied as space flight and solar roofs.
Tom Libby, analyst with IHS Markit, says, "Regardless of whether or not 2016 vehicle sales surpass last year, 2016 will turn out to be another very strong year for the industry, particularly from the perspective of the depths of the recession in 2009-11." Almost all of the companies are more profitable, and their products are higher quality. Libby says, "It's easy to lose sight of how far we have come from six years ago."
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