US Automakers Report Sales Decline; 2017 Outlook Seems Bleak

GuruFocus.com
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- By Mayank Marwah

U.S. auto sales dropped for the seventh time in the year, plummeting 7% to 1.42 million vehicles in July, as per Autodata.

Although the economy is improving with a reduction in unemployment, consumer behavior toward the auto industry has not been encouraging in the first seven months of the year. Year-over-year comparisons have become tough as 2016 was a record year, and U.S. vehicle sales have trailed 2016 all year. Trucks and SUVs were the highlights of the month while sedans and passenger cars let the industry down on account of falling gas prices.


Here's a thorough analysis on the monthly performance of the automakers.

The Detroit Three

General Motors (GM) registered a 15.4% sales decline in July year over year to 226,107 units. Sale of all the company's brands remained poor. Chevrolet, Cadillac, Buick and GMC witnessed sales drops of 15.4%, 21.7%, 30.5% and 7.3%. Retail sales plunged 14%. General Motors' passenger cars also did not fare well. Sales of the Chevy Spark minicar were down a mammoth 81.9% to 764 units in July year over year whereas sales of the Chevy Sonic subcompact car declined 47.3% to 2,552.



Source: www.goodcarbadcar.net

General Motors' Detroit counterpart Ford (NYSE:F), too, did not fare satisfactorily in July. The company reported a sales drop of 7.4% to 199,318 units, which was the biggest decline since October. This was attributable to the declining fleet and retail sales. Car sales plunged 19.4% including a 12.5% decrease in Ford Fiesta subcompact sales as well as a 42.2% downfall in the sales of the Fusion midsize car. On the other hand, Ford brand sales plummeted 7.7% while the luxury Lincoln brand experienced a 2.5% sales decline year over year.



Source: www.goodcarbadcar.net

Fiat Chrysler Automobile (FCAU) posted a 10.5% sales slump in July year over year. Ram was the odd one out to report a sales gain while all the other key brands registered double-digit sales declines such as Jeep (down 12.3%), Chrysler (down 30.1%), Dodge (down 11.9%) and Fiat (down 18%). Retail and fleet sales were disappointing, down 6% and 35%.

How the other automakers fared

Toyota (TM) sales surged 3.6%. A noteworthy part of the company's sales was that its sedan sales were impressive as compared with that of its competitors. The sales gain was powered by the RAV4 crossover whose volumes stood at a monthly record of 41,804 units, up 31.1%. The combined sales of SUVs, crossovers and pickups rose 17.4%. In contrast, the passenger car segment suffered a setback, down 11.5% year over year.

Honda Motor (HMC) said that its July sales fell a meager 1.2%. Passenger car sales climbed 1.9%. In contrast, the combined sales of SUVs, crossovers and pickups decreased 4.2%. Honda brand sales plunged 1.7% while Acura witnessed a 3.7% sales increase.

Nissan's (NSANY) sales plummeted 3.2%. The combined sales of SUVs, crossovers and pickups surged 5.3%. Luxury Infiniti lineup sales spiked 9%, but passenger car sales went down 11.2% while sales of the Honda brand decreased 4.1%.

Last word

The seasonally adjusted annualized sales rate stands at 16.8 million vehicles for July. Last year was a historic and significant one for U.S. automakers. U.S. auto sales reached a record 17.5 million units in 2016. The industry continued to grow for seven successive years. Analysts project that this year the growth will come to a halt, given the run the industry has had so far.

Disclosure: I do not hold any position in the stocks mentioned in this article.

This article first appeared on GuruFocus.


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