US consumers shun cars in favor of SUVs, trucks – Detroit Free Press
U.S. consumers continue to make it clear they have very little interest in cars but continue to have a voracious desire to buy SUVs and pickups, a trend that is increasingly creating winners and losers among automotive manufacturers.
In February, brands with hot-selling crossovers, SUVs and pickups posted sales gains while those overly exposed to cars struggled unless they boosted incentives to help clear out inventory.
For the month, industry sales fell 1.1% compared with last year, putting automakers on pace to sell 17.58 million vehicles this year if the February selling rate continues, a figure that slightly exceeds last year’s record of 17.55 million new vehicles sold in the U.S.
Among the Detroit Three, sales increased 4.2% for General Motors but fell 4% for Ford and 10% for Fiat Chrysler Automobiles. Meanwhile, sales increased 12.7% for Volkswagen,3.7% for Nissan, 2.3% for Honda and were flat for Hyundai but fell 10% for Toyota and 14% for Kia.
Car sales continue to fall
Sales of cars fell for virtually every manufacturer and accounted for just 37% of all vehicles sold in February.
At Ford, cars sales dropped 24% while sales increased 5.8% for SUVs and 3.9% for trucks. Total SUV sales for the Ford brand totaled 68,820 vehicles, a 6% increase compared with a year ago. Sales of the popular Ford Escape increased 16%.
At GM, sales dropped 42% for the Chevrolet Malibu, 21% for the Chevrolet Impala, 84% for the Buick Verano and 36% for the Buick Regal, Meanwhile, sales rose 13% for the Chevrolet Equinoix, 18% for the Chevrolet Tahoe and 25.9% for the GMC Acadia.
Fiat Chrysler’s overall sales fell 10% compared with last February in part because the company discontinued the Dodge Dart and Chrysler 200 late last year but was still selling those vehicles last February.
At Nissan, sales of crossovers, sport-utility vehicles and trucks led the way, rising 22%. That included a February record for the red-hot Rogue crossover, which rose 53.7% to 33,149 units.
“Anyone who thought declining sales of traditional cars had bottomed out is sadly mistaken. Midsize cars, in particular, continue to drop by double digits, and, in some cases, despite hefty incentives,” said Michelle Krebs, executive analyst for AutoTrader.
Inventory and incentives rising
With car sales slowing, some automakers have too much inventory and must boost incentives.
Incentives per vehicle rose an estimated 13.5 percent to $3,443 last month, according to automotive forecasting firm ALG. GM, Ford, BMW, Daimler and Fiat Chrysler all spent more than $4,000 per vehicle.
There are several reasons for the rising incentives. After a seven-year stretch of sales increases — and record U.S. sales in 2016 — demand is starting to slow and inventory on dealer lots is increasing.
According to Edmunds.com, the U.S. auto industry has built up an inventory that works out to an estimated 102 “days to turn” for subcompact cars and 82 days to turn for mid-size cars. Days to turn is an industry term that measures the time it would take to sell all of the inventory without any additional production. Typically, anything over 65 is considered excessive.
“Days to turn has reached its highest level since July of 2009, and new vehicle inventory was up 9% year-over-year in February,” said Jessica Caldwell, executive director of industry analysis for Edmunds.com. “Automakers are in a tricky spot: Aggressive incentives are already starting to eat into profits and residuals, but it takes discipline to pull back the production reins in what’s still a fairly strong market.”
Alec Gutierrez, senior analyst for Kelley Blue Book, said he is closely watching inventory levels and rising incentives but said the industry isn’t approaching a crisis yet.
He said economic indicators remain favorable for the industry – low unemployment, consumer confidence at a 15-year high and a flourishing stock market.
Truck rivalry gets nasty
Ford sold more than 65,000 F-Series pickups last month, the most for the month of February in 13 years, “despite very aggressive incentives” from crosstown rival GM, said Mark LaNeve, Ford’s head of U.S. marketing and sales.
LaNeve said GM’s incentives on the Silverado topped $7,000 for the month according to data the industry buys from J.D. Power, a big increase compared with the prior month. Meanwhile, Ford reduced its average incentives on F-Series pickups by $330 to $3,800 per truck.
“So we are very pleased with our performance for F-Series in the face of such an escalation from a key competitor,” LaNeve said.
GM spokesman Jim Cain disputed the the size of the truck incentives estimated by J.D. Power’s “PIN” data — which is typically viewed as the best incentive industry estimates.
“There were higher incentives year-over-year,” Cain said, “But not of the magnitude that PIN data describes.”
Either way, sales of Chevrolet Silverado pickups increased 17% to 50,504 and sales of the GMC Sierra increased 16% to 17,618.
Contact Brent Snavely: 313-222-6512 or email@example.com. Follow him on Twitter @BrentSnavely. Contact Eric D. Lawrence: firstname.lastname@example.org. Follow him on Twitter: @_ericdlawrence. The Associated Press contributed to this story.