Auto Industry on Watch for Headwinds After U.S. Sales Mixed

Mixed Bag: Breaking Down the June Auto Sales Numbers
  • GM, FCA, Honda, Toyota miss estimates; Nissan, Ford beat
  • July sales now seen a key after May slowdown in labor market

A mixed bag of U.S. sales reports from the world’s biggest automakers failed to alleviate concerns that the market is slowing and that growing economic uncertainty will keep consumers from spending.

General Motors Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and Honda Motor Co. said Friday that June U.S. sales trailed analysts’ estimates, while Nissan Motor Co. and Ford Motor Co. beat projections. Industrywide sales rose 2.5 percent to 1.51 million vehicles, researcher Autodata Corp. reported. The industry’s annual sales pace, adjusted for seasonal trends, was 16.7 million, below analysts’ projection of 17.2 million.

The results underscore the question of whether industry growth has peaked. The year was already at a critical pivot point as prospects dim for a repeat of 2015, when modest growth in the first half gave way to an ebullient final six months starting in July. One reason for the nervousness now: U.S. employers added the fewest jobs in almost six years in May.

“We could be looking at the first decline in auto sales since the recession,” said Jeff Schuster, an analyst with research firm LMC Automotive, “If we don’t see that bump up in July, that’s going to start us down that path of fairly regular misses on a monthly basis.”

Toyota sales fell 5.6 percent, while analysts had expected a 3.6 percent gain. GM deliveries fell 1.6 percent as the largest U.S. automaker continues to reduce less-profitable business with rental fleets. The Detroit-based company said retail sales to individuals rose more than 1 percent.

Nissan sales jumped 13 percent to a June record, while Ford’s 6.4 percent light-vehicle increase and FCA’s 6.5 percent growth were led by pickups and sport utility vehicles. Analysts projected gains for all of the six largest automakers except GM.

“In spite of some severe stock-market volatility in June, the American consumer stayed focused on buying new vehicles and propelled FCA to six vehicle sales records last month,” sales chief Reid Bigland said in a statement.

Ford said it’s closely monitoring fallout from the U.K.’s vote last week to leave the European Union -- the so-called Brexit -- but said it didn’t see any impact on U.S. sales at the end of June.

Brexit “obviously dominated the news coverage and then triggered a sell-off,” Mark La Neve, Ford’s vice president of U.S. marketing, sales and service, said Friday on a conference call with analysts and reporters. “In the face of that, the consumer hung in and were buying cars over that last week of the month because we closed really strong.”

Dimmer View

Yet even as U.S. industrywide sales through June outpaced 2015, analysts surveyed by Bloomberg were taking a less optimistic view for this year. Their average outlook for the full year slid to below 17.7 million cars and light trucks, from an estimate of 17.8 million in January. In the final six months of 2015, the annual sales rate often exceeded 18 million.

GM’s June decline included a 3.7 percent drop for the Chevy Silverado large pickup. Two of its big SUVs, the Chevy Suburban and the Cadillac Escalade, had gains of 33 percent and 17 percent, respectively. 

Toyota’s results were dragged down by a 13 percent decline in sales of its Camry family sedan and a 27 percent plunge in deliveries of its Prius hybrid. Sales of its RAV4 small sport utility vehicle rose 10 percent.

F-Series Surge

Strong truck sales drove Ford’s light-vehicle deliveries, which beat estimates of a 4.9 percent gain. The automaker also said its sales in the first half of the year were the best in a decade.

F-Series pickup sales surged 29 percent in June to 70,937 units. Sales of Transit commercial vans rose 19 percent, while those of Escape SUV rose 20 percent. Ford’s sedans continued to struggle, led by a 49 percent drop in sales of the subcompact Fiesta and a 44 percent decline in Taurus deliveries.

La Neve said there was no apparent impact on F-150 sales from Chevrolet’s attack ads that showed longtime market leader Ford’s aluminum truck tearing when heavy objects were dropped in its bed.

“They tried this, and the numbers speak for themselves,” La Neve said

FCA deliveries were shy of the 8.9 percent gain analysts had projected. Jeep sales rose 17 percent, but car and minivan deliveries fell 13 percent.

Nissan sales exceeded analysts’ average estimate of a 7.2 percent gain. The Nissan brand showed balanced growth: Car sales rose 13 percent, while light trucks gained 14 percent. That included surges of 26 percent for the Rogue crossover, 44 percent for the Versa compact car and 22 percent for the Maxima sedan. Sales of premium Infiniti models increased 11 percent.

Honda sales rose 3.2 percent, missing estimates for a 9.4 percent gain.

‘Potential Contraction’

The reduced full-year estimate came after the May U.S. jobs report and as the British vote last week spooked financial markets. June’s pace was not only slower than May’s 17.5 million, it even came in below last June’s 17 million pace.

“There certainly is a higher probability of having a slightly down year than there was a month ago,” Schuster said. “It’s no longer just a leveling off -- it’s a potential contraction in the second half of the year.”

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