By Jamie Butters, Keith Naughton and David Welch, Bloomberg
Automakers began the year with a stark Detroit-versus-Japan divide.
General Motors, Ford and Fiat Chrysler all posted U.S. sales that fell short of analyst estimates for last month, as demand plunged for domestic sedans including the Chevrolet Cruze and Ford Fusion. Toyota and Nissan, meanwhile, boosted deliveries on the backs of RAV4 and Rogue crossover models.
The Detroit Three are coming off the first annual sales drop in their home market since the recession and are having a harder time coping with consumers abandoning passenger cars. Some automakers also may have endured a bit of a hangover — the industry ended 2017 with its best showings of the year, thanks in part to heavy discounting.
“This is a bumpier start to the year than we expected,” Jeff Schuster, an analyst with LMC Automotive, said by phone. “Payback plays a role here after the robust fourth quarter of last year and the heightened level of incentives.”
Analysts were projecting the industry’s monthly annualized sales pace would slow to about 17.1 million cars and light trucks, the average estimate in a Bloomberg News survey. That rate, which is adjusted for seasonal trends, accounts for dealers having one more selling day on the calendar than a year earlier.
GM projected an industry sales pace of 17.4 million light vehicles, which would match last year’s pace. Carmakers ended 2017 logging their best monthly selling rates in the last four months of the year, according to researcher Autodata Corp.
Fiat Chrysler slid as much as 2.3 percent, while Ford shares fell as much as 1.1 percent. GM, which eke out a sales gain for the month, rose 0.3 percent to $42.53 as of 1:05 p.m. in New York.
Fiat Chrysler’s U.S. sales have declined for 17 consecutive months as the company curtails discounted shipments to fleet customers including rental-car companies. The automaker halved those deliveries in January compared with a year earlier. The Jeep SUV brand logged record January sales to retail buyers.
Chief Executive Officer Sergio Marchionne also has re-engineered car plants to produce more profitable pickups and sport utility vehicles instead. The automaker began shipping the new Jeep Wrangler SUV to dealers and debuted the redesigned Ram 1500 truck at the North American International Auto Show in January. Ram pickup sales fell 13 percent last month, before the redesigned model starts production.
Ford said last month it plans to adopt a playbook similar to Marchionne’s: dump slow-moving sedans at the expense of SUVs. But the company’s crossovers had a rough January, with deliveries dropping for models including the Escape, Edge and Flex.
“As we move through the year, we will perform better in all SUV segments,” Mark LaNeve, Ford’s U.S. sales chief, said on a conference call. “With Edge and Escape, we lowered incentives much more than the industry did in those segments. We’ll be updating Edge later this year and Escape not too far off in the future.”
Toyota’s 17 percent surge in total sales matched the highest projection in a wide range of estimates. Barclays analysts predicted the jump in a report Monday and said in an email that they expected the Japanese automaker to boost fleet sales during the month.
Deliveries climbed 16 percent for Toyota’s revamped Camry sedan and 20 percent for the RAV4, the industry’s top-selling SUV last year. Sales of the runner-up Nissan Rogue increased 26 percent.
About 29 percent of Nissan’s U.S. deliveries were to fleet customers, including its own dealers, during the first 11 months of last year, according to Autotrader.
“It is safe to assume that Nissan will still rely heavily on rental sales to start 2018 to gain market share,” said Zohaib Rahim, an analyst for the car-shopping website.
The auto market has been benefiting from stable fuel prices, available credit and low unemployment. The tax bill signed by President Donald Trump probably will support demand in 2018, though most carmakers and analysts still project that annual industry sales will decline for a second consecutive year. GM expects tax cuts will boost economic growth and be a tailwind for the industry, Chief Financial Officer Chuck Stevens said last month.
Domestic automakers had a soft month, partly due to fallout from strong sales to end 2017, said Michelle Krebs, a senior analyst with Autotrader.
“There is always payback in January after a big December,” she said. “We expected them to retreat from incentive deals, but they rolled them right into January.”
Bloomberg’s John Lippert and Gabrielle Coppola contributed.