Auto sales plunge as companies slash fleet sales, car numbers decline

Auto sales plunge as companies slash fleet sales, car numbers decline

Only Toyota posts a gain as all automakers struggle with changing conditions.

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August 2, 2017
By Robert Schoenberger
Cars/Light trucks Economy

Toyota's Rav4 small SUV helped pull the automaker to No. 2 in the U.S. in July, only 4,050 vehicles behind General Motors. 

Cleveland, Ohio – Ouch.

Between losing a sales day compared to July 2016, an industrywide push to reduce car rental fleet sales, production problems for specific vehicles, and general public disinterest in most cars, auto sales plunged 7.6% for the seven largest manufacturers.

Only Toyota posted positive results, pushing past Ford to take the No. 2 spot for the month. But its gains were meager and dominated by crossovers and SUVs.

The silver linings for July appear to be that the industry is showing some financial discipline. With car sales continuing to fall (SUVs and crossovers continue to sell well), companies chose to slow production and accept lower sales rather than dump the vehicles at a loss on the rental market. How long that discipline will last is the big question.

Breaking down company-by-company results:

  • General Motors – 226,107 -15.4%. GM’s retail sales fell 14.4%, but results could have been worse. Fleet sales plunged 22.7% as the company cut back on rental fleet sales and received fewer orders. Had the automaker kept fleet sales at the level they’d been in July 2016, overall sales would have still been down about 13%, but company executives argue that top-line sales figures are less important than profits, and automakers make little-to-no profit on rental sales. Results were down sharply for the car-heavy luxury brands – Buick down 30.5% and Cadillac down 21.7%. Strong sales of vans (more on that from Ford), Chevy Colorado pickups, and 7-seat crossovers helped Chevrolet (down 15.3%) and GMC (down 7.3%) post slightly better results.
  • Toyota – 222,057 4.4%. One vehicle kept Toyota in the black and pushed it within a rounding error of being the No. 1 automaker in the U.S. in July – the Rav4 SUV. Toyota sold an all-time monthly record 41,804 of the SUVs, nearly 10,000 more than a year ago. To be exact, Rav4 sales were 9,918 units higher than a year ago, while the automaker’s combined car sales fell by 10,719 units. So the Rav4 made up for the car losses, while smaller gains for the Highlander crossover (up 25%) and 4Runner SUV (up 2.9%) pushed total results higher.
  • Ford – 200,212 -7.5%. In addition to miserable car sales (down 20.6% combined), Ford posted a 67.3% plunge in commercial van sales. The automaker in late June recalled 400,000 Transit vans during the month and stopped sales on existing models to fix a defective driveshaft coupling. With the popular van unavailable, some customers turned to GMC (Savannah sales nearly tripled) and Chevrolet (Express up 7.1%). In addition to lost van sales, Ford cut fleet deliveries to about 20% of sales from 25% with almost all of that decline coming from rental fleets. On the plus side, F-Series pickup sales gained 5.8%, and average transaction prices rose $2,500 to $45,000. (Back of the envelope math – 69,467 F-Series trucks sold at $45,000 per truck = $3.13 billion in revenue).
  • Fiat Chrysler Automobiles LLC (FCA US) – 161,477 -10.5%. A few years ago, Chrysler 200 sedans filled rental lots nationwide. As the automaker phases out that vehicle and slashed fleet sales, it’s harder to find Chrysler rentals. Fleet sales fell 35% during July, 16,086 vehicles. Without that massive fleet decline, FCA sales would have been down only slightly. Outgoing vehicles were responsible for the bulk of the losses (Jeep Patriot, Chrysler 200, Dodge Dart, Chrysler Town & Country). Truck and commercial van sales were flat, and a bright spot came from Alfa Romeo cars with 1,225 sold (up from 43 a year ago).
  • Honda – 150,980 -1.2%. Honda sells few if any cars to rental fleets, so its relatively flat sales are a fairly decent indicator of retail demand. Company officials say sales would have been slightly higher, but aggressive inventory management (avoiding sending too many vehicles to dealer lots) left the company with low supply levels for some models. Despite the unpopularity of small cars for other automakers (Toyota and Nissan included), the Honda Civic compact posted an 11.3% gain. Further separating itself from its competitors, Honda’s entire car line posted a 2.8% rise, while losses came on the truck/SUV side of the business. Steep drops for the Ridgeline pickup (down 26.5%) and CR-V crossover (down 11.8%) erased a 37.5% gain for the HR-V small crossover.
  • Nissan – 128,295 -3.2%. The Nissan Rogue small crossover, the vehicle that has single-handedly dragged the automaker’s sales higher for more than a year, appears to have peaked. July sales fell slightly (down 2.6%), although full year-to-date totals are still very positive (up 25.2%). The problem for Nissan all year has been car sales, and that continued in July with all models except for the Sentra posting losses (Sentra posted a 1% gain).
  • Hyundai/Kia – 108,822 -19.4%. Hyundai Sonata sales were down 47.1%, Elantra was down 35.6%, and sales were down for the Veloster sporty car and others. Like its competitors, Hyundai and its Kia subsidiary noted declines in rental fleet sales (don’t expect fresh cars if you’re renting any time soon), but the car-heavy company is also suffering from a lack of pickups and SUVs. The Kia brand only fell 5.9% as its car declines weren’t as large as the Hyundai losses, and the new Nitro small SUV continued to gain.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 17 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net