Wednesday, May 17, 2017

USA auto sales drop for four straight months


Probably the main observation from my Chicago trip was the seemingly huge mismatch between the purveyors of high quality goods at amazingly reasonable prices presented with all the élan the marketing geniuses can muster and the lack of shoppers buying these offerings. There is something definitely weird about the economy that does not seem to be showing up in the big-time statistics such as unemployment and inflation. Yes, there are those who watch retail sales who see some major-league catastrophes but because retailing is so hopelessly overbuilt, these same folks seem to still be overlooking the more general collapse of purchasing power.

And as if on cue, we are seeing the end of the major USA auto boom that has been driven by low interest rates, cheap fuels, and a wide selection of well-built vehicles. Well, interest rates are still low, the cars are still excellent, and fuels are quite cheap yet sales seem to have hit a wall. Apparently the folks who could buy a new car have bought that car with a five year warranty and payment schedule. So this sales slump could last awhile.

There is also an institutional reason why car sales might never see another 17.55 million unit sales year like 2016 again. Electric cars. Compared to electric cars, the  internal combustion (ICE) vehicle suddenly seem hopelessly complex and unreliable. A well maintained 10-year-old EV is a new battery pack and tires from being essentially a new car. A brushless electric motor has almost nothing to wear out and EVs do not even need gearboxes and exhaust systems. But because going electric involves a bunch of lifestyle changes, it is unlikely there will be a massive boom in EV sales even when the day arrives when EVs have become superior in every objective category for a buy consideration.

US car boom ending as sales drop for fourth month

DW, uhe/kd (Reuters, AFP, dpa) 02.05.2017

The US car market appears to be cooling faster than expected as the big three American automakers as well as their foreign rivals reported fewer sales in April - the fourth consecutive month of declines.

After peaking last year with a record of 17.55 million cars sold throughout 2016 in the United States, the American car boom is coming to an end with a bang.

The big three American automakers on Tuesday all reported falling sales in April, compared to the same period last year. Industry analysts had expected the retreat - forecasting an industry-wide decline of between one and four percent - but the real figures surprised many.

General Motors (GM), the biggest US automaker, saw its sales drop 5.8 percent from April 2016, while Ford sales fell 7.2 percent. FCA US, the North American arm of Fiat Chrysler, even dropped seven percent.

Toyota saw a decline of 4.4 percent in the US market year-over-year, while Germany's Volkswagen (VW) was still suffering from its diesel emissions scandal in the US, barely making up a massive loss a year ago with a small gain of 1.6 percent in April.

Huge incentives

It was the fourth straight month of decline for the industry, which Automotive News characterized as "the longest losing streak since the market bottomed out in 2009."

Sales to consumers at car lots - rather than corporate, government and rental fleet sales - accounted for a big part of the downward slide at most companies. Even Americans' love affair with sport utility vehicles and light trucks could not compensate for the decline.

Industry analyst Jessica Caldwell of Edmunds said the market was starting to see "the slowdown in 2017 we've been anticipating," adding: "The industry has been holding its breath to see if the days of peak sales are over."

In April, car sellers relied on incentives and discounting to lure customers into dealership lots, offering average incentives of $3,814 per new vehicle - up 13 percent, according to a joint analysis by JD Power and LMC Automotive.

Yet, the US car industry is still selling a lot of vehicles. GM touted double-digit spikes in sales of crossover vehicles, with Chevrolet and GMC models up 20 percent or more, and Buick and GMC models seeing increases in the 40 percent range.

FCA US was down across all of its brands, except Ram trucks which saw sales rise five percent. Ford's bright spot was SUVs, with a 1.2 percent gain, while the company's total car sales plunged 21.2 percent. Toyota SUV sales rose 12.9 percent.

1 comment:

  1. This is bad news for the car industry in USA. This is probably due to the policies of the recent government and the taxes that has been imposed on the industry that car industry is declining.

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