Chicago (AFP) – Automakers reported mostly lower US vehicle sales in July in a fresh sign that the industry’s boom may be slowing.
Ford reported a three percent overall sales decline year-over year last month, while General Motors announced an almost two percent decline.
FCA US, the American subsidiary of Italy-based Fiat Chrysler Automobiles, managed to eke out a 0.3 percent sales increase.
GM, the biggest US automaker, remained optimistic thanks to a five percent year-over-year gain in retail sales — cars sold to customers at dealerships — led by its Chevrolet, GMC and Buick brands.
The company sold 267,258 vehicles in total in July.
“Low interest rates, full employment, stable fuel prices and increasing wages remain in place and these positive factors continue to point toward a strong second half of the year and another potential record year for the industry,” Mustafa Mohatarem, GM’s chief economist, said in a statement.
GM has been focusing on retail customers, and moving away from less profitable fleet sales to large companies, government agencies and rental shops. Declines in fleet sales dragged on its overall growth.
“The American consumer is, on balance, doing well,” Jesse Hurwitz, an economist at Barclays Capital, told AFP, pointing to consumption growth and savings declines that suggest “households are feeling healthy overall.”
But Ford and FCA US offered the opposite picture.
At Ford, fleet sales were up six percent and retail sales down by the same amount, for a total of 216,479 vehicles sold.
Even Ford’s popular F-Series pickups posted a one percent decline from a year ago, although the company said the retail side of those sales was the best so far this year.
At FCA US, retail sales were down two percent compared to last July. Fleet sales were up a whopping 22 percent. The company sold a total of 180,727 vehicles.
Jeep and Ram Truck brands were bright spots, with sales up five percent from a year ago.
The auto industry saw a record year in 2015 with almost 17.5 million vehicles sold, besting its previous record from the year 2000.
The boom was driven by low interest rates, rising employment, low gasoline prices and pent-up demand as consumers waited to replace aging vehicles.
“The average age of the car in US roads is 10 years old. Trucks are something like 11,” industry analyst Michelle Krebs of AutoTrader told AFP in an earlier interview. “That’s the oldest fleet we’ve ever had.”
Krebs said strong demand will likely mean another record sales year in 2016, though there are likely to be “bumps in the road” and sales are likely to soften in 2017.
Jessica Caldwell, a senior analyst at industry researcher Edmunds.com, said that automakers are offering lower financial incentives to spur sales than they did a year ago, and that consumer demand on its own may not be sufficient to lift the industry to another record sales year.
“If automakers expect to outperform last year’s record-breaking sales, they’re going to have to lean more heavily on creating and promoting attractive financing offers to lure new buyers into showrooms,” Caldwell said.
COMMENTS
Please let us know if you're having issues with commenting.