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FCA: Volume slips again; fleet share at 26%

» FORD: Deliveries fall on big drop in SUV volume » TOYOTA: Truck sales power 2nd straight gain

UPDATED: 3/1/18 1:12 pm ET

Most of the biggest auto companies in the United States posted sales declines in February as the market continues to cool.

Ford Motor Co. and General Motors each fell by about 7 percent while American Honda dropped 5 percent and Nissan Motor Corp. was off 4.3 percent. FCA US may have found some solace in a 1.4 percent setback -- its smallest drop in nine months.

Toyota Motor Corp. and the Volkswagen brand were each up for a second straight month.

The results posted so far reflect an extension of last year’s cooldown after seven years of post-recession gains. Sales have risen in just three of the last 12 months, including a 1.2 percent increase to start the year.

Sharp February declines in sales of high-profit, big pickups at GM and FCA pickup sales may add to any concerns. At the same time, transaction prices continued to rise, and the pace of incentive spending slowed, albeit slightly.

Company by company

GM, which posted a 6.9 percent decline, said fleet sales rose 7 percent, driven by a 15 percent increase in commercial shipments, while retail volume slipped 10 percent "compared to an exceptionally strong February 2017."

Demand fell 8.8 percent at Chevrolet and 8 percent at GMC while rising 1.2 percent at Buick and 14 percent at Cadillac.

While crossover demand remained strong, GM's car sales fell 16 percent. And sales of GM's big pickups, the Chevrolet Silverado and GMC Sierra, dropped by 16 percent or more.

At Ford, volume dropped 6.8 percent, with retail sales off 8.5 percent and fleet down 3.8 percent. Deliveries dropped 6.1 percent at the Ford division and 23 percent at Lincoln. Ford posted weaker car and SUV sales and strong pickup volume.

FCA US extended its losing streak to 18 months as the company continued to cut back on fleet sales -- a key part of its profitability push.

Every FCA brand except Jeep and Alfa Romeo declined. FCA said fleet sales fell 3 percent compared with February 2017. Jeep shipments rose 12 percent -- the second consecutive monthly gain after a 16-month string of declines. Demand dropped 3.5 percent at the Chrysler brand, 8.4 percent at Dodge, 14 percent at Ram and 42 percent at Fiat.

Nissan Motor Co. reported a 4.3 percent decline in February sales, with volume off 4 percent at the Nissan brand and 6.7 percent at Infiniti.

Among other automakers, sales rose 3.8 percent at Subaru, 13 percent at Mazda and 6 percent at the VW brand.

Among other luxury brands, volume rose 12 percent at Audi, 21 percent at Porsche and 19 percent at Land Rover, while falling 37 percent at Jaguar.

Market dynamics

When other automakers report results later today, analysts expect the industry to record a decline for February. Cox Automotive and Edmunds see deliveries dropping about 4 percent compared with February 2017. Incentives dropped slightly from year-earlier levels, J.D. Power says.

Ford posted weaker U.S. car and SUV sales and strong pickup volume in February. Photo credit: DAVID PHILLIPS

Sales last month continued to be driven by healthy light-truck demand, notably crossovers, while car and fleet volumes remained weak. Low, but rising, finance rates and gasoline prices as well as steady job gains are supporting industry sales, automakers and analysts say.

The shift to crossovers, SUVs and pickups continues to propel average new transaction prices higher.

Kelley Blue Book estimates the average transaction price for light vehicles in the United States was $35,444 in February, That’s up $722 from February 2017 and $96 lower than January of this year.

“New-car buyers are still willing to pay top dollar for the latest models with the most current features and technology,” said Tim Fleming, analyst for Kelley Blue Book. “Even the new Honda Accord and Toyota Camry are commanding large premiums over their predecessors, despite competing in a rapidly shrinking segment.”

The U.S. new-vehicle market, after seven straight annual gains capped by a record 2016, dropped 1.8 percent to 17.245 million last year.

While tax reform is expected to provide a lift to U.S. sales, analysts say a flood of off-lease vehicles and rising interest rates will likely temper demand for new vehicles this year.

“The impact of tax reform and tax refunds aren’t being felt fully by consumers yet," GM's chief economist, Mustafa Mohatarem, said Thursday. "We expect consumer spending to pick up as tax cuts are reflected in pay checks.”

Overall, U.S. sales are forecast to drop below 17 million for the first time in three years, with most 2018 estimates from analysts ranging from 16.7 million to 16.9 million units. Sales rose 1.2 percent in January.

SAAR outlook

Analysts polled by Bloomberg expect the seasonally adjusted sales rate for February to come in at 16.9 million, down from 17.46 in February 2017 and January’s 17.18 million rate. GM on Thursday estimated the SAAR will tally 17.1 million in February.

Company outlook

Ahead of today’s reports, February sales were projected by analysts polled by Bloomberg to rise at just two major automakers: Toyota Motor Corp., with an anticipated 3.7 percent gain, and Volkswagen-Audi, with a 4.1 percent projected increase.

February deliveries were expected to fall 4.5 percent at General Motors, 6 percent at Ford Motor Co.; 11 percent at FCA US; 3.1 percent at Nissan Motor Co., 2.3 percent at Honda Motor Co. and 5.2 percent at Hyundai-Kia.

Spiffs

The average new-vehicle incentive was tracking at $3,840 in the first three weeks of February, J.D. Power says, down $14 from a year ago. But ALG estimates average incentives rose 5.3 percent to $3,656 last month compared to February 2017, while dropping 1.9 percent from January. General Motors, Nissan and FCA were the biggest spenders on deals last month, ALG data show. (See chart below.)

Odds & Ends

Interest rates on new-vehicle loans are expected to soar to their highest level in eight years in February, according to Edmunds. The annual percentage rate on newly financed vehicles averaged 5.2 percent in February, compared to 4.9 percent in Feb. 2017 and 4.4 percent five years ago ... There were 24 selling days last month vs. 24 in February 2017 ... J.D. Power says days to turn, the average number of days a new vehicle sits on a dealership lot before being sold to a retail customer, was 70 through Feb. 18, flat with the same period in Feb. 2017 … Light trucks accounted for 67 percent of U.S. light-vehicle deliveries in the first three weeks of the month, the highest level ever recorded in February, J.D. Power says … Incentives, expressed as a percentage of sticker price, stood at 10.2 percent in early February, matching or exceeding the 10 percent threshold for the 19th time over the last 20 months, J.D. Power says.

Quotable

"Inventory out on dealer lots is growing, so we expect to hear announcements from automakers about extending summer shutdowns soon. Plants that have a high concentration of car assembly rather than light truck assembly will likely be affected by extended shutdowns." -- Ray Telang, U.S. automotive leader for PwC, an audit and consulting firm

“Car shoppers tend to have tunnel vision when it comes to their monthly payments. As average transaction prices and interest rates rise, we’re likely going to see more consumers explore the option of leasing. In some cases this is a result of consumers simply seeking a way to cut down monthly payments, but for many others, this the only option available when they discover that they can no longer afford the costs of a new vehicle.” -- Jessica Caldwell, executive director of industry analysis for Edmunds

"The impact of the recent tax changes has not quite filtered through to consumer behavior. Consumers may be a bit on the fence, delaying a purchase as they evaluate the benefit of the changes to their income. The story relative to slowing demand for cars and strong demand for utility vehicles continues to underlie results.” -- Stephanie Brinley, senior automotive analyst at IHS Markit

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FCA: Volume slips again; fleet share at 26%

» FORD: Deliveries fall on big drop in SUV volume » TOYOTA: Truck sales power 2nd straight gain