A potential slowdown in U.S. vehicle sales could move investors into the buy or sell lane when automakers begin to report earnings later this week. Ford (F) will report after the bell this Thursday April 25, followed by General Motors (GM) on April 30 and Fiat Chrysler (FCAU) on May 3. Analysts predict 2019 vehicle sales will fall below 17 million units after hitting 17.3 million in 2018.
In the first quarter of 2019, GM total vehicle sales fell 7% compared to the first quarter of 2018. Analysts expect GM to report an adjusted EPS of $1.10 on revenue of $35.44 billion. Chevrolet, which accounts for 68% of GM sales, fell 7.8% in the first quarter. At Cadillac, which accounts for almost 6% of GM sales, the drop was 2% year-over-year. But Cadillac President Stephen Carlisle said the division is in the midst of a turnaround that includes an all new CT5 sedan.
“Sedans are still important to the brand. There is a lot of discussion as to where sedans are headed in the market but we see them as critically important,” Carlisle told Yahoo Finance.
The CT5 is part of Cadillac’s strategy to appeal to younger drivers. It comes with a standard 237-horsepower turbocharged 2.0-liter four-cylinder engine that can be upgraded to a 335-horsepower twin-turbocharged 3.0-liter V-6. The CT5 will replace the ATS Sedan this fall. Cadillac sedans saw sales decline across the board in the first quarter, but Carlisle said the strategy is working overseas in China.
“The average buyer in China is about 32 years old,” said Carlisle, adding that 50% are first time buyers and 32% are female. “That seems like a sweet spot in a pretty aggressive product cadence.”
Ford bets on SUVs
Ford’s luxury brand Lincoln is also turning to China for growth but a big part of its strategy there and in the U.S. relies on SUVs, not sedans. Lincoln’s first quarter sales are up 11%, according to Lincoln President Joy Falotico, who said the increase is on the back of Lincoln’s SUV lineup. “We had double digit gains on the Navigator, the MKC and the Nautilus,” she said.
Ford announced last year it was phasing out sales of sedans in the U.S. market. That announcement helped push sales down 18.4% in 2018. Analysts expect Ford to report first quarter adjusted EPS of 26 cents on revenue of $37.49 billion. Lincoln is part of Ford’s shift to more profitable SUVs and crossovers. It just unveiled the all new Corsair SUV which goes on sale this fall. Falotico told Yahoo Finance the Corsair is an entry-level SUV for a first-time luxury car buyer but also a step-down SUV.
“For some of the Boomers who are looking to get out of the big vehicle because they are empty nesters,” Falotico said the Corsair, which replaces the MKC will be built at its plant in Louisville, Kentucky. It will also be the first SUV Ford builds in China. Falotico said pricing will be announced in a few months with more news about an electric version of the Corsair coming later this year or next.
Adam Shapiro is the co-anchor of Yahoo Finance’s On the Move.