January 22, 2018

November Mixed for U.S. Sales as Automakers Hike Discounts

November Mixed for U.S. Sales as Automakers Hike Discounts

If that forecast comes true, the race to move new vehicles off dealers’ lots will only intensify next year.

Brandon Mason, a director at PwC’s automotive practice, said a worrying trend for the industry was a rising number of subprime loans. He said subprime levels are at just over 20 percent of originations, against more than 30 percent prior to the Great Recession, but recent increases remain a concern.

“That’s a bit of a red flag,” Mason said. “It’s something to keep an eye on as we move into 2018.”

No. 1 U.S. automaker General Motors Co said its sales fell 2.9 percent in November, with sales to consumers flat against the same month in 2016. Much of the decrease was driven by lower fleet sales to rental agencies, businesses and government agencies.

GM said strong SUV and crossover sales pushed its average transaction price for the month above $37,000 for the first time. The company’s level of unsold cars, which has been a concern for analysts and the industry, rose slightly to 83 days supply, from 80 days at the end of October.

“More vehicles are sold in December than any other month and we are very well positioned because we have momentum in so many segments, but especially in crossovers,” said Kurt McNeil, U.S. vice president of sales operations.

Fleet sales are a low-margin business for automakers.

Fiat Chrysler Automobiles NV (FCA) in particular has targeted a significant reduction in this type of sale in 2017.

The automaker posted a 4 percent overall decrease in sales for November, but said fleet sales were down 25 percent while sales to consumers were up 2 percent on the year.

No. 2 U.S. automaker Ford Motor Co reported a 6.7 percent increase in sales in November, with fleet sales up nearly 26 percent and retail sales 1.3 percent higher than in November 2016.

Ford said SUV sales rose 13.3 percent in November, while its pickup truck sales were up 4.1 percent.

“November and December over the last few years has become a very big merchandising window for the industry,” Ford’s U.S. sales chief Mark LaNeve told reporters on a conference call.

He said price competition between automakers should continue into 2018, but it “should not be too disruptive.”

Toyota Motor Corp said its sales were down 3 percent, while Honda Motor Co Ltd sales rose 8.3 percent.

Volkswagen AG said its sales were down 1.6 percent.

Nissan Motor Co Ltd said in a statement a systems outage meant it would not post official November results until Dec. 4, but estimated its U.S. sales rose 14 percent versus November 2016.

GM shares closed down 30 cents at $42.79, FCA was off a penny at $17.09 and Ford ended up 8 cents at $12.58.

(Reporting by Nick Carey; editing by Phil Berlowitz and Tom Brown)

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