By Mike Colias and Christina Rogers
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 2, 2017).
U.S. auto industry sales continued to slump in August amid
mounting signs that American car buyers have become more fickle
following a seven-year growth streak
While General Motors Co. and Toyota Motor Corp. notched
relatively strong gains, fueled in part by heavier discounting,
others reported lower results, with some citing lost sales tied to
Hurricane Harvey.
U.S. light-vehicle sales in August fell 1.9% from a year
earlier, according to Autodata Corp. The industry's annualized
selling pace, a measure of how sales are tracking for the full
year, was 16.14 million last month, below analysts' expectations
and down from 17.22 million a year ago. The weaker performance
comes despite last month having an extra selling day.
GM's August sales jumped 7.4% from a year earlier, totaling
275,552 vehicles, as the Detroit giant deepened discounts on many
SUV models, aiming to make room on dealer lots for newer
versions.
The nation's largest auto maker cleared out much of the excess
inventory that has been worrying investors this year, with stocks
on dealership lots falling to an 88-day supply, from 104 days in
July.
Ford Motor Co.'s sales slipped 2.1%, to 209,029 vehicles, as
demand for SUVs cooled. Still, it reported a 15% surge in sales of
pickup trucks, its biggest profit generator.
Fiat Chrysler Automobiles NV's August sales dropped 11%, to
172,773 vehicles, as five of its six brands reported declines.
Sales for Jeep -- FCA's highest-volume brand -- fell 15%, while
sales of its Ram pickups dropped 7%.
Shares of the Detroit auto makers rallied. GM and Ford shares
were up 2.2% and 2.9%, respectively at Friday's close. FCA shares
jumped 4.8% after Standard & Poor's revised its outlook for the
stock to positive.
Strong auto sales have helped underpin the nation's economic
recovery since the financial downturn, rising seven straight years
to a record of more than 17.5 million vehicle sales in 2016. That
streak is almost certain to end this year though, after the
industry posted lower growth in each of the first eight months.
August's seasonally adjusted annual selling pace was the slowest
for the closely watched benchmark since October 2014.
Market watchers believe auto sales could get a lift in coming
months as owners of vehicles lost to the flooding in Texas and
Louisiana buy replacement cars. Between 500,000 and 1 million
vehicles likely were totaled during the storm and subsequent
flooding, according to Black Book, a research firm that compiles
car valuations.
August results were mixed for Japanese brands. Toyota's sales
rose 6.8%, to 227,625 vehicles, while Nissan Motor Co.'s sales
tumbled 13%, to 108,326 vehicles. Honda Motor Co.'s sales dipped
2.4%, to 146,015.
The muted August results could lead to some especially sweet
deals for car shoppers visiting dealership lots for Labor Day
promotions in the coming week, typically one of the busiest selling
periods for the car business.
Auto makers have been sitting on bloated inventories for months
and are scrambling to purge their lots of current-year models to
make way for fresher versions. The car companies are behind on the
annual model changeover this year -- an unusually high 91% of
vehicles sold in the first half of August were from model-year
2017, according to research firm J.D. Power.
The lag could pressure auto makers' profitability because
later-model vehicles generally entail lower discounts and thus
carry higher profit margins.
GM's incentive spending rose sharply in August as the company
cleared out older crossover SUVs to make way for the launch of
several redesigned models. GM's SUV sales jumped 47% compared with
a year earlier, while Ford's fell 11%.
Crossover SUVs, which ride on car platforms and return better
fuel economy than truck-based SUVs, have become a key battleground
as car buyers migrate away from sedans. Auto makers "have gotten
much more aggressive from an incentives and marketing standpoint"
in SUVs, Nissan U.S. sale chief Judy Wheeler said in an
interview.
Discounts have heated up as auto makers face declining sales in
other categories.
A lull in Ford's new-model pipeline has left dealers with
relatively stale crossover SUVs in their showrooms.
Toyota outsold Ford in August for the second straight month -- a
rarity -- amid a sharp increase in SUV sales. Mark LaNeve, Ford's
U.S. sales chief, said the car maker has new models coming,
including a new full-size Expedition SUV and EcoSport small
crossover.
Write to Mike Colias at Mike.Colias@wsj.com and Christina Rogers
at christina.rogers@wsj.com
(END) Dow Jones Newswires
September 02, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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