Detroit Three auto sales soar in record year – Detroit Free Press
Those in the automotive industry and pretty much everyone in Michigan needs to step back and appreciate this: For the Detroit Three and anyone involved in the car industry, these are the best of times.
In 2015, automakers sold more cars and trucks in the U.S. than any year in the history of the industry. The final tally topped 17.47 million, surpassing the prior record of 17.35 million from 2000.
Fiat Chrysler Automobiles said it sold more vehicles than in any year since 2005.
Ford had its best year since 2006.
General Motors sold nearly 3.1 million vehicles, a 5% increase over 2014.
“It’s a great time to be in the automobile business, and it’s particularly sweet for those who lived through the dark days of 2009 and 2010,” said Tom Libby, an analyst for IHS Automotive.
What’s more, the industry and the Detroit Three are healthier now than in 2000 — the last time the industry sales were this robust. Back then, the industry ended on a sour note as December sales fell, the nation was bracing for a recession, the Detroit Three were losing market share and GM was getting ready to idle eight plants in the U.S. and Canada.
This time around, the U.S. economy is still improving, the Detroit Three are holding steady when it comes to market share, and the industry is selling its cars and trucks at higher average transaction prices than ever before. In 2015, the average new car transaction price for a new car was $33,188, according to IHS Automotive. That’s up 20% since 2005, when the average price of a new vehicle was $27,655.
It also helps that pickup sales are roaring and Americans are embracing the small and midsize crossovers made by the Detroit Three.
Need evidence? Sales of FCA’s Jeep brand soared 25% in 2015, Ford sold more than 780,000 pickups and GM counted its subcompact Chevrolet Trax and Buick Encore crossovers among its hot sellers for the year.
To be sure, troubling reminders of how fragile the global economy is are on full display this week. China halted trading on Monday after stocks fell dramatically following a disappointing manufacturing report that showed its economy is slowing down. In the Middle East, tensions between Saudi Arabia and Iran are escalating and concerns about regional strife are rising. Both of those situations drove down U.S. stock markets and could have negative implications for the auto industry.
Here in Michigan, where the cycles of the automotive industry can swiftly usher in periods of prosperity and pain, such events must always be watched carefully.
But auto executives are not worried yet. In fact, automakers think they will sell slightly more cars and trucks in 2016, likely setting another industry record.
“We expect to see a second consecutive year of record industry sales in 2016,” GM Chief Economist Mustafa Mohatarem said in a statement.
Ford Chief Economist Emily Kolinski Morris said she expects a strong housing market, historically low mortgage rates, and falling unemployment rates will all help to keep the good times rolling for the auto industry.
“We expect that many of the favorable factors that supported a record 2015 performance will remain in place this year,” Kolinski Morris said.
Analysts at Kelley Blue Book say they expect automakers will sell between 17.5 million and 18 million new cars and trucks this year.
The industry closed out 2015 with the strongest month of the year as automakers sold 1.64 million cars and trucks, a 9% increase compared with the same month a year ago.
In December, sales rose 12.6% for FCA, 8.3% for Ford and 5.7% for GM.
FCA’s performance was propelled by its Jeep brand as sales soared 42% for the month. The 89,654 Jeeps sold in December account for 41% of the 217,527 cars and trucks sold by the Auburn Hills automaker for the month.
Sales also rose 6% for Dodge, 4% for Ram and 1% for Fiat but fell 21% for Chrysler in December.
“FCA US finished 2015 strong with sales up 13% and our best December sales since we started business more than 90 years ago,” said Reid Bigland, Head of U.S. Sales. “For the second straight year, the company has topped 2 million in U.S. sales.
Ford’s December sales of 239,242 were up 8% from a year ago with F-Series trucks up 15%. The 85,211 pickup sales added last month were enough to cement the truck’s 39th year as the best-selling pickup and 34 years as best-selling vehicle.
“It was the first time we exceeded 85,000 sales in a decade,” said Mark LaNeve, head of U.S. sales, marketing and service.
The luxury Lincoln brand sales were up 12% last month and 7% for the year. LaNeve said the last time Lincoln hit the 100,000 sales mark for the year was 2008. The new MKX contributed with a 77% increase in December.
GM said the popularity of its full-size pickups along with new all new models such as the Chevrolet Trax and Buick Encore subcompact crossovers along with the Chevrolet Colorado and GMC Canyon midsize pickups helped to boost its sales.
“In a record year for the industry, GM gained significant retail market share and we grew our commercial business by 12%,” Kurt McNeil, GM’s U.S. vice president of sales, said in a statement.
GM said its average transaction prices were a record $37,000 in December, up $1,150 year over year. For the full year, average prices were a record $34,500, up $630 from 2014. Aiding the profitability: incentive spending was down slightly for the month and up less than 1% for the year.
Asian automakers also reported strong sales gains. Nissan said its sales rose 18.7% in December and 7.1% for the year; Toyota’s sales increased 10.8% in December and 5.3% for the year and Honda’s sales increased 9.9% in December and 3% for the year. At Hyundai, sales fell 1.5% in December but increased 5% for the year.
Toyota’s SUV and light truck sales gained ground as sales rose 17.8% for its RAV4 crossover, 15.8% for its Tacoma midsize pickup and 8.8% for its Highlander SUV even as the automaker held onto sales leadership for the Camry, which was the best-selling car in America for the 14th year in a row.
“We had a great close to the year in December … posting record sales in both the Toyota and Lexus divisions,” said Bill Fay, group vice president of the Toyota division. “We expect that the industry growth will start to level off a bit at these historic record volumes.”
Volkswagen, which was recently forced to admit to selling vehicles with software that intentionally understates diesel fuel emissions, saw its sales drop 9.1% in December and 4.8% for the year.
While the overall auto industry thrived in 2015, sales of passenger cars slowed down as more Americans turned to flexibility and improved fuel economy of small and midsize crossovers.
Sales of midsize SUVs rose an estimated 12% for the year, or double the overall market, to about 1.7 million units, according to IHS Automotive. Sales of all non-premium SUV’s and crossovers grew 30% from 4.2 million units in 2013 to 5.45 million in 2015.
That trend is expected to continue in 2016, as Americans continue to embrace stylish, capable vehicles that appeal to families. Top sellers in those segments range from compact crossovers such as the Ford Escape and Toyota Rav4 to the Honda Pilot and Jeep Grand Cherokee.
“In 2016, we expect to see see continued shopping for sport utilities at the expense of small and midsize cars,” said Michelle Krebs, senior analyst for AutoTrader.com.
Another trend to watch in 2016 will be the potential for increased competition between relatively new used cars with low mileage.
Krebs said the percentage of new vehicles purchased through leasing has substantially increased in recent years and owners will return a record number of those vehicles in 2016.
That flood of cars being turned in after leases expire could increase the competition between used cars and new cars, Krebs said.
“Can the market expand enough to absorb all of those, or will there be some trade-offs there?” Krebs said.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely.