Strong retail demand for its expanded crossover lineup helped Hyundai post a 5 percent increase in January U.S. sales.
Hyundai said retail demand for crossovers rose 54 percent to 25,110 last month, offsetting lower car sales and a 68 percent drop in fleet deliveries. Overall, crossover sales totaled 25,861, up 23 percent and a January record, the company said.
Hyundai's crossover lineup has been expanded to six models with the addition of the large Palisade and subcompact Venue in the last year.
Retail demand for the Tucson, Hyundai's top-selling crossover in 2019, rose 61 percent, with overall volume for the model rising 8 percent in January.
Hyundai's gains came even as the brand's incentives dropped last month, according to TrueCar/ALG estimates. (See chart below.)
U.S. light-vehicle sales are expected to fall in January, hurt by lower retail demand, even as incentives rise, analysts said.
Yet the final tally for January will be incomplete since BMW Group, Nissan North America, and the Volkswagen Group’s VW, Audi and Porsche brands late last month joined the Detroit 3 in shifting from monthly U.S. sales releases to quarterly reports.
Toyota Motor Corp., Honda Motor Co., Daimler, Subaru, Jaguar Land Rover, Mazda, Mitsubishi, Kia and Volvo are also expected to report January results today.
Incentives
J.D. Power and LMC said average industry incentives in January topped $4,000 per vehicle for the first time during the month, one of the slowest periods of the year for showroom traffic.
TrueCar/ALG estimates average incentives totaled $3,674 last month, a drop of 1.3 percent from January 2019 ($3,721) and 13 percent from December 2019 ($4,207). (See chart below.)
Amid slowing retail demand, automakers and dealers have been forced to dangle fatter discounts to keep inventories in check and clear out remaining 2019 models.
Some dealers offered $9,000 off on the all-new Jeep Gladiator pickup, CarsDirect reported last week. Ford dealers dangled up to $6,000 in rebates on remaining 2019 Edge and Escape models and Kia pitched discounts up to $4,000 on the Sedona and Optima, according to Cox Automotive data.
Some discontinued models, notably cars, have been marked down even more, with $6,000 discounts on the 2019 Buick Cascada, deals up to $8,250 on the 2019 Buick LaCrosse, and up to $15,000 off on the Jaguar XJ sedan, Cox data shows.
Overall, discounts were on track to average $4,136 last month, an increase of $258 over 2019, J.D. Power and LMC said.
“The larger concern remains the record level incentive spending supporting the underlying volume,” said Thomas King, head of J.D. Power’s data and analytics group.
SAAR outlook
The seasonally adjusted, annualized rate of sales for January is expected to come in at 16.5 million to 16.7 million, according to estimates from TrueCar/ALG, J.D. Power/LMC and Cox Automotive, in line with the January 2019 SAAR of 16.58 million but down from December’s 16.98 million rate.
2020 outlook
U.S. light-vehicle sales finished 2019 down 1.2 percent at 17.1 million, with higher fleet shipments offsetting weaker retail volume, according to the Automotive News Data Center. Most analysts see 2020 volume dropping to 16.4 million to 16.9 million on lower retail deliveries. Edmunds sees sales remaining flat in 2020.
S&P said affordability and heightened consumer interest in purchasing used vehicles will likely undermine U.S. light-vehicle demand this year, even as the risk of a recession drops to 25 percent to 30 percent from 30 percent to 35 percent.
“The U.S. auto industry remains under fiscal pressure due to various geopolitical risks and the downward trend of used-vehicle prices," S&P Global Ratings credit analyst Nishit Madlani said a report last month. "In addition, the recently reached trade agreement between the U.S. and China will only have a limited impact on the industry and the next round of [trade] negotiations will likely drag out over many years. In the meantime, the imposition of substantial tariffs on imports could hurt the auto market and lead to consumer price increases."
Odds, ends
- There were 25 selling days last month, the same as Jan. 2019.
- J.D. Power said average incentive spending on cars was on track to rise $328 to $3,952 per vehicle in January, while spending on pickups, crossovers, SUVs and other light trucks was on pace to increase $217 to $4,200.
- The average number of days a new vehicle sat on a dealer lot before being sold to a retail customer was 71 through Jan. 19, J.D. Power said, up one day from Jan. 2019.
- Fleet deliveries are expected to total 269,800 last month, a decline of 1.2 percent from January 2019, with overall fleet volume forecast to account for 24 percent of total light-vehicle sales, flat from a year ago, J.D. Power said.
