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Thursday, August 02, 2018

Car Sales Tumble As Automakers Slash Discounts For The First Time In 5 Years

For years, some more skeptical analysts had been stumped by the relentless US consumer demand US for new cars, despite rising household debt levels, stagnant real wages, and concerns about record subprime exposure. Today, we may have found the dynamo that drove purchases to a plateau of between 17 and 18 million units over the past three years: pervasive dealer discounts and incentives.

Almost all major manufacturers reported a sharp drop in U.S. deliveries for July, led by a 15% plunge at Nissan Motor. The reason: for the first time in 55 months, the auto industry - perhaps due to concerns about the impact of auto tariffs - cut back spending on incentives, snapping a streak of monthly consecutive increases that began 4 1/2 years ago, according to J.D. Power.

While General Motors stopped reporting its monthly numbers earlier this year, Bloomberg reports that its sales fell 3.3% last month, the same drop as Ford.

Fiat Chrysler, which recently lost its CEO Sergio Marchionne, was the rare bright spot in July, driven largely by a surge in Jeep SUV sales fueling the Italian-American company’s 5.9% jump.

However, as we reported previously, both automakers could have used some positive headlines. GM lowered its profit expectations last week largely because of rising commodity prices, which have jumped since President Donald Trump put tariffs on steel and aluminum; meanwhile Jeep’s surprisingly weak performance in China - where subsidies for new auto purchases recently ended - was a major reason Fiat Chrysler dropped its forecasts for the year.

As a result of underwhelming numbers from Nissan, Ford and Honda (and GM), the annualized industry sales rate slowed to just 16.8 million, from 17.2 million in June, and just barely above last year's selling rate.

Fiat shares declined 2.2%, while GM fell 2% and Ford dropped 1.4% in New York trading.



Anonymous said...

They have no one to blame but themselves.
Corporate greed and wage stagnation have finally come home.

Don't feel a damn bit sorry for them.
Corporations like this have helped to create these problems.
Glad they are starting to suffer like the rest of us.

I haven't purchased a new car in over 15 years because the prices are not realistic to incomes of the average person or family. I've had to by used at what used to be the price of a new.

Anonymous said...

Anybody know any thing about the local toyota dealership and their sales mngmt? LokiLoo for a new camry but don't want to deal with mike Culver if he's over there from honda

Anonymous said...

Used is better and there is a surplus of used vehicles available. Just shop wisely!

Anonymous said...

1st the car industry
2nd housing
3rd entertainment (professional sports salaries - NFL/MLB/NBA/NHL)

3 figure tix for a PRESEASON/exhibition/fake NFL game = ridiculous!