A good showing from Japanese automakers wasn’t enough to offset lower figures from the “Detroit 3” in June, leading the industry to its sixth straight month of lower US new car sales and effectively confirming what analysts had been warning — last year’s record pace isn’t going to be duplicated in 2017.
Industry-wide, sales for the month dropped 3.0 percent from the prior month, and compared to June of last year, according to Autodata figures.
The sales pace amounted to an annual rate of 16.51 million units, seasonally adjusted, down from 16.8 million at this time last year.
Ford Motor Co. and General Motors Co. said sales slipped 5 percent last month, while Fiat Chrysler Automobiles logged a 7-percent decline.
Though Fiat Chrysler did slightly better than what most analysts were expecting, the company’s key Jeep brand slipped 11 percent in June.
Those figures, experts say, are somewhat concerning given that American buyers can’t seem to get enough sport utility vehicles (SUVs) and crossovers, the very vehicles that Jeep makes.
“It’s had a tough year,” said Michelle Krebs, executive analyst for Autotrader. “Yes, Jeep is shifting around some models, but this is Jeep’s market and it’s not capitalizing on it. I think what one has to ask is there something more going on with Jeep than just shifting around some of its models.”
Fiat Chrysler is in the midst of reshuffling its US production footprint, a process being led by moving Jeep Cherokee production from Toledo to a plant in Illinois. The new Jeep Compass is now being built in Mexico, while Jeep is killing off the Patriot.
Through the first half of the year, only two of the six models Jeep currently sells — the Renegade and Grand Cherokee — have posted higher sales figures. Sales of the Jeep Cherokee have fallen 19 percent. Sales of the Toledo-built Wrangler, which had been on a long growth pattern, were down 1 percent for the year and down 6 percent in June.
Brandwide, first half sales are 13 percent lower this year than they were last year.
Meanwhile Subaru, another crossover-heavy brand, has seen its sales jump 9 percent so far this year.
“If I worked at Fiat Chrysler I’d be doing a really deep dive into exactly what’s happening at Jeep and will the new products turn that around,” Krebs said.
Jeep is expected to debut the next-generation Wrangler sometime in the next few months and should debut a revamped Cherokee early next year.
The biggest gainers among full-line automakers last month were Toyota and Nissan, which both eked out a 2-percent increase. Honda was up 1 percent. Volkswagen, having put the diesel scandal mostly in the rearview mirror, was up 15 percent, while Subaru was up 12 percent.
Hyundai, Mazda, and Kia all reported double-digit sales declines.
All together, total US new car sales were down 3 percent in June, according to AutoData Corp.
But while the market is contracting, it’s important to keep in mind that 2016 set an all-time record for new car sales in the United States.
“It’s not as if there was a steep decline. We’re off a few percentage points from last year and I think what we’ve seen in recent years is the second half is quite strong,” said Jessica Caldwell, an analyst with Edmunds.com. “Even with the decline we’re still at a pretty high historical sales pace.”
Though incentive deals aimed at luring in buyers have been creeping up, experts say automakers seem to be showing a fair amount of restraint in not chasing volume at the expense of profit.
And for some automakers, a portion of the decline is in part based on their strategy. General Motors, for example, said its US daily rental sales were down by more than half in June. The company said that was planned.
“US total sales are moderating due to an industry-wide pull-back in daily rental sales, but key US economic fundamentals clearly remain positive,” Mustafa Mohatarem, a GM chief economist, said in a statement. “Under the current economic conditions, we anticipate U.S. retail vehicle sales will remain strong for the foreseeable future.”
With low unemployment, a strong stock market, and good consumer confidence, most experts agree.
They also say there’s an argument to be made that companies can do just as well or possibly better even as total sales decline because what they are selling tends to be more profitable.
“Even if overall volume is down a bit, it’s still a profitable business to be in with consumer preference for trucks and SUVs where they are,” said Alec Gutierrez, a Kelley Blue Book analyst.
THE BLADE (TOLEDO, OHIO)/TNS WITH INPUTS FROM AFP