US auto sales push records as consumers defy slump

The US may be the lone bright spot in an otherwise sluggish global economy as American consumers continue to buy expensive new vehicles at record levels.

With several automakers having reported US sales, companies say the industry is on pace for the best April ever.

They’re selling more expensive sport utility vehicles and pickups, a clear sign that consumers are confident enough to make big purchases.

April’s results show a rebound from the first quarter, when sales were at historically high levels but showed slowing growth.

The next few months of auto sales will show whether the US economy has staying power, especially if consumers maintain buying momentum.

“It’s a very nice rebound from the softness we saw in March,” said Jeff Schuster, senior analyst with IHS Automotive in Troy, Michigan.

“The US economy is set up pretty well to weather the global slowdown. The next several months will be the real test.”

Investors may need more evidence of strength before betting on the auto industry. Despite the strong month, General Motors shares fell more than 1% to $31.38, Ford Motor Co. was down 1.1% to $13.47 and Fiat Chrysler Automobiles NV was off more than 2% to $8.01 at 1:07 p.m. in New York.

Auto stocks fell during a broad market selloff that saw the Dow Jones Industrial Average and Standard & Poor’s 500 Index both fall almost 1%.

Some automakers are more cautious in their optimism.

Nissan Motor Co. spent 12% more on sales incentives than it did a year ago, with an average cost of $3,300.

Some of that was done to clear out lingering 2015 model cars, but the company isn’t convinced that good times are here to stay, said Judy Wheeler, vice president of sales for Nissan’s US business.

“The market is not quite as robust as it was last year, and that’s what you’re starting to see,’’ Wheeler said. “But it will still be fairly strong.’’

The strong month came even as most automakers pulled back on rebates and incentive deals. GM said that all carmakers discounted vehicles by about 10% of average transaction prices.

In the first quarter, the average discount amounted to 11% of the average sale price, Schuster said.

FCA said yesterday that its US sales rose 5.6% in April, beating analysts’ estimates and extending its streak of monthly gains to more than six years — thanks to the popularity of Jeep SUVs and Ram pickups. Nissan, Toyota Motor Corp. and Honda Motor Co. also beat estimates, while Ford and GM missed lofty expectations.

FCA’s sales reached 199,631 cars and light trucks, the automaker said in a statement. That easily beat analysts’ estimates of 4.3% growth.

Jeep sales, which boosted the carmaker’s first-quarter profit, jumped 17% from a year earlier, as Compass and Renegade more than doubled. The Ram truck brand gained 12% to 45,810.

“Consumer preference for SUVs and pickup trucks continued unabated in April and helped to propel us to our strongest April sales in 11 years,” Reid Bigland, head of US sales for FCA, said in the statement.

The company has been increasing production of SUVs and pickups to meet consumer demand.

Even as consumers slowed new-vehicle purchases in March, a strong labour market, available credit and relatively cheap gasoline will fuel 17.8m in new car and light truck deliveries in 2016, beating last year’s record, according to a Bloomberg survey.

“There was a little bit of nail-biting in terms of what March was and what it meant going forward,” said Kevin Tynan, an auto-industry analyst with Bloomberg Intelligence. “April was important.”

Nissan was projected to be the biggest gainer among the top automakers and it didn’t disappoint: Sales rose 13%, topping the 11% average estimate. Nissan brand light-truck sales rose 10% to an April record, and the brand set an April record for cars, too, with Sentra up 12% and Altima up 29%.

Toyota’s US sales rose 3.8% in April compared with the year-ago period, slightly beating estimates. That included a 5% increase at the company’s Toyota division, which sold 186,243 cars and trucks in April.

The division’s truck sales set a record for the month, with RAV4 sales up 32% and Highlander sales up 9.3%. At Toyota’s Lexus luxury division, sales dropped 3.8%.

Honda sales rose 14%, beating the average estimate for a 10% increase.

Ford’s light-vehicle sales rose 3.6%, shy of the average estimate for a 3.8% increase, according to Bloomberg.

Sales of the F-Series pickup line rose 13% and SUV sales also jumped 7.7%. The Dearborn, Michigan automaker’s 231,316 total deliveries, including heavy trucks, marked its best April for retail sales in 10 years.

In another sign that consumers are buying expensive vehicles, sales for the Ford Explorer rose 22%. The SUV starts at more than $31,000 and can reach well over $50,000.

GM, the only US automaker projected to report a decline, fell more than analysts had projected as sales dropped 3.5%, compared with the average estimate of a 1.7% drop. All four of GM’s brands were down for the month.

The Detroit automaker said it has pulled back on low-margin sales to rental fleet customers and focused on selling more expensive cars to retail buyers, where it reported a 3.3 percent increase.

Chevrolet Silverado sales rose 8.7% to 49,990, and the new Malibu mid-size sedan gained 25% to 21,763, GM said.

The automaker’s pullback on low-margin fleet sales and its focus on retail has resulted in lower-than-expected sales in many months.

That’s by design because GM is trying to boost pricing and profits, said Kurt McNeil, GM’s vice president of US sales. The strategy has helped GM post record profits in North America last year and in the first quarter of this year.

For the whole industry, the average projection was for a 17.5m annualised selling rate for the month, adjusted for seasonal trends. That pace would be an increase of 800,000 from April 2015, which had one less sales day than last month.

The month may be even better than anticipated. Fiat Chrysler projected a 17.9m rate, including medium and heavy-duty trucks, which typically account for at least 200,000.

“A lot of eyes are on auto sales,” Schuster said. “They tend to be out in front of things as it relates to overall health of the economy, of the US consumer.

“We saw a little bit of weakness in consumer confidence recently, so this should help with that to bring those consumers that are questioning: Where is the US economy right now?”


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