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August 2, 2017 | Carmageddon for Hyundai, GM, Chrysler, Ford

On his site WOLFSTREET.com, Wolf Richter slices into economic, business, and financial issues, Wall Street shenanigans, complex entanglements, debacles, and opportunities that catch his eye in the US, Canada, Europe, Japan, and China. He lives in San Francisco.

But not every automaker got crushed.

Every month in 2017, auto industry data providers have given dismal forecasts of auto sales. And every month, these forecasts weren’t nearly dismal enough. On July 27, Kelley Blue Book forecast that total new vehicle sales in July would fall 5.7% year-over-year. It would be the worst year-over-year decline this year. But it wasn’t nearly bad enough.

Instead, what we got…

Oh, if you see words like “plunge,” “plummet,” or “collapse” a lot, it’s because that’s the kind of numbers some automakers reported today.

  • Total new vehicle sales fell 7.0% year-over-year to 1.415 million, according to Autodata. This is the number of vehicles sold and delivered by dealers to their customers, or delivered by automakers directly to large fleet customers.
  • It was the seventh month in a row of year-over-year declines.
  • Year-to-date, total new vehicle sales are down 2.9%.
  • Car sales plunged 13.8% to 525,020 vehicles. They’re down 11.7% year-to-date.
  • Truck sales – which include pickups, SUVs, compact SUVs, and vans – had been booming as Americans are shifting from cars to trucks. They accounted for 63.3% of total retail sales, the highest ever for any July, and the 13th month in a row above 60%. But even these erstwhile booming truck sales fell 2.5% from a year ago to 890,119 vehicles.
  • The Seasonally Adjusted Annual Rate (SAAR) of sales fell to 16.7 million, the fifth month in a row under 17 million, and down from 17.8 million in July 2016.
  • The average new vehicle sold to retail customers had spent 72 days on the lot, according to J. D. Power, the highest since July 2009 during the collapse of the auto industry.
  • Loans of 84 months and longer accounted for more than 6% of retail sales for the first time ever.

No, automakers didn’t “slash” fleet sales

Some automakers like to claim they’re backing off low-margin fleet sales. The media hype this up — “carmakers slash rental fleet sales,” is how Reuters explained the July sales swoon. But automakers are not slashing any kind of sales. They’re trying to get what they can. Otherwise they’d have to close even more plants and lay off even more people.

But rental car companies are over-fleeted. Rideshare companies are eating into their markets and are demolishing them in the business travel segment. Rental car companies are adjusting by whittling down their orders for new vehicles. Fleet sales have dropped not because automakers “slashed” them, but because rental car companies are in a pickle and cut their orders.

 

General Motors got sucker-punched.

GM’s total sales plunged 15.5% year-over-year to 225,911 vehicles. Kelley Blue Book had courageously forecast a plunge of 9.1%, but it wasn’t nearly dismal enough. They’re now down 3.9% so far this year.

  • By brand: Chevrolet sales plunged -15.3% (151,502 units), GMC -7.3% (47,412 units), Buick a catastrophic -30.5% (15,966 units), and Cadillac -21.7% (11,227 units).
  • Trucks sales plunged 10.5% year-over-year, but remain up 3.0% year-do-date.
  • Car sales collapsed 31.5% to just 43,089 vehicles. They’re down 20.2% year-to-date. Of GM’s total sales, only 19% are car sales. This is why GM is weighing killing six car models, shuttering plants, and laying off more people.
  • Retail sales plunged 14.4% to 202,220 vehicles. GM has already cut production, closed plants, and laid people off to deal with its horrendous inventory levels. Nevertheless, it finished July with 104 days’ supply on dealer lots. For some car models it has well over 200 days’ supply.

Ford didn’t get crushed quite this badly.

Total sales fell 7.4% to 199,318 vehicles and are down 4.3% year to date. By brand: Ford -7.7% (191,337 units) and Lincoln -2.5% (8,875 units).

  • Car sales plunged 19.4% to 48,259 vehicles and are down 20.1% this year.
  • Truck sales fell 2.8% to 151,059, with SUV sales up 2.2% to 71,067 units and pickup sales down 7.1% to 80,886 units. The F-series truck is the best-selling vehicle in the US. That its year-over-year sales are dropping like this is not a propitious sign. Year-to-date, truck sales remain up a dwindling 2.1%.
  • Ford ended the month with 66 days’ supply on dealer lots, just above what is considered the upper limit of healthy (60 days).

Fiat-Chrysler gives up on cars.

FCA total sales dropped 10.5% to 161,477 and are down 7.2% for the year so far.

  • Car sales plunged 17.7% to 19,400 and are down 23.3% year-to-date. FCA’s cars almost don’t matter anymore. As of this year, none of them will be made in the US. Of FCA’s total sales in the US, cars account for only 12%, the lowest of any automaker.
  • Truck sales plunged 9.4% to 142,068 and are down 4.2% for the year.

Winners & mostly losers among other major automakers.

Toyota was the second largest auto seller overall, barely behind GM and comfortably ahead of Ford. Total sales rose 3.6% to 222,057 but remained down 2.5% for the year.

  • Toyota car sales plunged 11.5% to 90,257. But note: Toyota sold over twice as many cars as GM and nearly twice as many as Ford.
  • Toyota truck sales jumped 17.4% to 131,800 and are a up 7.7% year to date. Doing something right in a tough climate.

Honda total sales inched down 1.2% for the month to 150,980 and 0.2% for the year.

  • Car sales rose 1.9% for the month to 76,468. That was down 5.4% for the year. But it was the second highest total behind Toyota, and 77% ahead of GM’s car sales.
  • Truck sales fell 4.2% for the month to 74,512 but are up 5.3% for the year.

Nissan total sales fell 3.2% for the month to 128,295, but are up 1.9% for the year.

  • Car sales plunged 11.2% to 60,496 and are down 11.5% year-to-date, behind Toyota and Honda but 40% ahead of GM.
  • Truck sales rose 5.3% to 67,799 and are up 18.3% year-to-date. Not everything is getting crushed. But wait…

Hyundai Motor Group, oh my!

The conglomerate includes Hyundai and Kia. While Kia is experiencing a decline near industry average, Hyundai is spiraling down in an amazing manner.

Hyundai total sales plummeted 27.9% in July to 54,063, by far the steepest crash of the major automakers. Year-to-date, sales are down 10.8%, also the worst of any major automaker.

  • Car sales collapsed an apocalyptic 43.2% to just 30,057. They better come out with some great new models and lower price points ASAP.
  • Truck sales – all SUVs – rose 8.8% to 24,000. A small consolation.

It has gotten so bad at Hyundai that Kia, the smaller sister of Hyundai, outsold it, with total sales dropping only 5.9% to 56,403, beating Hyundai’s total sales by 2,340 vehicles. They’re down 9.3% so far this year.

Kia’s car sales rose 2.3% to 37,800, but its truck sales plunged an eye-popping 19.2% to 18,600 vehicles and are down 18.8% year-to-date – in truck-loving America!

The Germans are going cold:

Volkswagen Group sales (Audi, Volkswagen, Bentley, and Lamborghini) fell 2.6% to 46,148 vehicles. The only brand with sales gains was Audi, up 2.5%. But the group’s year-to-date sales rose 5.6%.

Daimler sales plunged 10.7% to 28,849 vehicles and are down 2.3% year-to-date.

BMW sales (includes BMW, Mini, Rolls Royce) plunged 13.6% to 26,463 and are down 5.3% year-to-date. In July, only Rolls was up (yup, soaring 33% to a whopping 100 cars).

A special note about Tesla.

Tesla’s numbers don’t matter because they’re too small. In July, according to Autodata estimates, Tesla sold 3,130 vehicles in the US, down 5.2% from a year ago.

Tesla has a market share of 0.2% in the US, below Porsche (0.3%) and way below GM (16.0%). Yet Tesla, which burns with blinding speed the cash investors feed it during its capital-raising efforts, has a market capitalization of $52.5 billion, higher than GM’s ($50.6 billion) and Ford’s ($43.6 billion). Which tells you just how nuts this stock market has gotten.

It’s not like automakers didn’t try.

They doused the market with the highest incentives for any July ever. According to J. D. Power, average incentive spending through July 27 reached $3,876 per new vehicle sold, up 7.8% from the prior record set in July 2016. For cars, it jumped to $4,174! And incentives as a percentage of MSRP reached 10.8%.

It’s a sign of tougher times to come when sales drop 7% despite record incentive spending – a combination that has been going on all year – and when car sales plunge nearly 14% despite even higher incentive spending.

Some automakers and car production are sinking deeper into Carmageddon. But no one does it faster Hyundai, not only in the US, its second largest market, but also in China, its largest market. In how much trouble is it? Read…  Hyundai-Kia Brutally Crushed in China, Mauled in the US

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August 2nd, 2017

Posted In: Wolf Street

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