FCA, Ford sales edge up behind trucks

UPDATED: 7/3/18 9:43 am ET

FCA US, behind strong demand for Jeeps and Ram pickups, posted an eight percent increase in June U.S. sales. Volume rose 19 percent at Jeep, 6 percent at Ram and 9 percent at Dodge, while deliveries skidded 32 percent at the Chrysler brand and 36 percent at Fiat.

FCA said U.S. retail sales totaled 155,208 last month -- its best June since 2004.

Ford Motor Co.'s U.S. sales rose 1 percent in June behind higher pickup, SUV and crossover demand. Deliveries edged up 1 percent at the Ford brand and 2.8 percent at Lincoln.

Overall, Ford said its retail sales increased 2.9 percent to 156,788 last month while fleet volume dipped 2.3 percent to 73,847.

When other automakers report results later today, analysts expect the industry to post an overall increase in June volume, driven by an extra weekend and early July 4 holiday promotions.

Analysts from LMC Automotive/J.D. Power, Edmunds and Cox Automotive project volume rose 2.1 percent to 3.4 percent last month from June 2017. It would be one of the industry's lowest monthly increases so far in 2018 but the fourth gain.

Volume continues to be driven by a strong economy, job growth and healthy light-truck demand -- notably crossovers. Low but rising finance rates are also supporting industry sales, automakers and analysts say.

Car and fleet deliveries remain weak.

Trucks rule

Even amid rising U.S. gasoline prices, the steady consumer shift to crossovers, SUVs and pickups continued last month and is helping to propel average new transaction prices higher.

ALG estimates the average transaction price for a new light vehicle was $33,148 in June, up 0.7 percent from a year earlier.

Kelley Blue Book says June was a particularly strong month for pickups, as average prices for full-size models rose 5 percent to just over $49,000, behind new models and a richer trim mix. Pricing for midsize pickups, a segment without new products, climbed 3 percent in June, Kelley Blue Book says.

U.S. new-vehicle sales, after seven straight annual gains capped by a record 2016, dropped 1.8 percent to 17.25 million units last year.

Sales are up 1.2 percent through May but are still forecast to drop below 17 million for the first time in three years. Most 2018 estimates from analysts range from 16.7 million to 17.1 million units.

SAAR outlook

Analysts polled by Bloomberg expect the seasonally adjusted sales rate for June to come in at 17 million, up from June 2017’s sale pace of 16.72 million and May’s 16.91 million rate.

Company outlook

Ahead of today’s reports, June deliveries were projected by analysts polled by Bloomberg to fall at just one major automaker: Nissan Motor Co. It’s expected to record a 7 percent decline as the company dials back on fleet shipments and reduces incentives.

March deliveries were expected to rise 5.6 percent at General Motors, 1.2 percent at Ford Motor Co.; 7.4 percent at FCA US; 2.2 percent at Toyota Motor Corp., 2.5 percent at Honda Motor Co., 3.5 percent at Hyundai-Kia and 2.2 percent at VW-Audi.

Spiffs

The average new-vehicle incentive was tracking at $3,765 in the first three weeks of June, J.D. Power says. ALG estimates average new-vehicle incentives rose 4.6 percent from June 2017 to $3,779 last month, with the Detroit 3 among the biggest average spenders on deals.

 Odds & Ends

• There were 27 selling days last month vs. 26 in June 2017
• Fleet sales are expected to account for 20 percent of U.S. light-vehicle deliveries in June, down slightly from June 2017, J.D. Power says
• The ratio of incentive spending to average transaction price is expected to be 11.4 percent in June, up from 11 percent a year earlier, ALG 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 June 17, flat with the same period in June 2017, J.D. Power says
• 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 June, and the 24th straight month above 60 percent, J.D. Power says.

Quotable

“The U.S. market is virtually saturated. Add to that record-high vehicle prices, rising interest rates and historically high numbers of people who owe more than their cars are worth, and the stage is set for a market contraction.”

-- Jeremy Acevedo, manager of industry analysis at Edmunds.