Auto sales decline but remain near record pace – USA TODAY
Low gasoline prices and higher discounts kept new cars and trucks moving off dealership lots in February at a near-record pace, despite what amounted to a slight decrease in sales compared to a year earlier.
Sales fell 1.1% to 1.33 million vehicles for the month, according to Autodata. Yet the pace for the month was strong enough that it kept the industry on track for a third consecutive year of record sales.
“It appears, that, coming off a pretty good November and December, the industry has gotten off to a good start to the year,” said Mark LaNeve, Ford’s vice president for U.S. marketing and sales.
Among the major domestic automakers, General Motors was the only one to post an increase in February, up 4.1%. Its sales to individual customers, which are more profitable than sales to rental or government fleets, rose 5%.
GM rival Ford Motor recorded a 4% decline — though the company’s luxury Lincoln brand continued its hot streak with an 8.8% increase.
In February, Fiat Chrysler continued its campaign of reducing its previously heavy reliance on fleet sales. The company said its fleet sales fell 26%, while retail sales declined 3%. Overall sales slipped 10.1%.
The performance among the Japanese automakers was uneven. Toyota’s slump continued as its U.S. vehicle sales fell 7.2%. Sales of pickups and SUVs were unable to overcome a 17.2% plunge in new car sales amid low gasoline prices, which are nudging consumers into bigger vehicles.
Nissan soared past analyst expectations with a 3.7% increase in sales for February. But discounts are giving Nissan sales a jolt. Nissan incentives per unit were $3,975 in February, up 17.1% from a year earlier, according to ALG. At Honda, sales were up 2.3%.
Rising inventory levels and sales incentives signaled that competition for customers is heating up. The discounting that is likely to result could possibly compromise automakers’ profitability if the trend continues.
Average incentives per vehicle — tactics that vary from cash-back deals to low-rate financing — rose 13.5% in February, compared to a year earlier, to $3,443, according to TrueCar subsidiary ALG.
“We have seen incentive spending increasing at a far greater pace than overall transaction prices,” Kelley Blue Book analyst Alec Gutierrez said.
Inventory levels at dealerships rose from 70 days supply a year ago to about 77 to 78 days in February, Gutierrez said. That means factories are assembling vehicles at a faster pace than dealers can sell them.
But the industry hasn’t reached a “crisis” mode yet because automakers are “more disciplined” than in the past about limiting excessive production when consumer interest wanes, Autotrader.com analyst Michelle Krebs said.
Contributing: Detroit Free Press reporter Brent Snavely.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.