Carmageddon: Ford & GM Sales Tank Despite Record July Incentive Spending

Tyler Durden's picture

It was hard to find a bright spot for auto investors in July's auto sales figures released earlier today with GM down 15% YoY, Ford off 7% and Chrysler down 11%.

The companies blamed the drops on lower fleet sales but GM’s retail sales also fell 14.4% from July 2016.  Meanwhile, Ford and Fiat Chrysler retail sales had single-digit declines, and their fleet sales fell 26% and 35%, respectively.

 

Here's a recap of how each of the largest OEM's made out in July:

GM:

Three of GM's four brands posted double-digit sales declines in July with Chevrolet down 15%, Cadillac down 22% and Buick plunging 31%.

 

While GM blamed weak fleet sales for their abysmal month, their retail sales declined 14% as well.

 

The Chevy Spark minicar withered, falling 81.9% to 764 units for the month, while the Chevy Sonic subcompact car declined 47.3% to 2,552.

 

Ford:

Ford retail sales fell 1% while fleet sales declined 26%.

 

Ford's flagship brand fell 8%, while the luxury Lincoln brand declined 2.5%.

 

Car sales were off 19%, including a 13% decline for the Ford Fiesta subcompact and a 42% decline for the Fusion mid-size car.

 

Fiat Chrysler:

All of Chrysler's major brands, except Ram, were down double digits. Jeep was down 12%, Chrysler 30%, Dodge 12% and Fiat 18%. Ram sales were flat.

 

Retail sales were down 6%, while fleet sales were down 35%.

 

Toyota:

The Japanese automaker soared past expectations for a surprise sales gain. The company's flagship Toyota brand and luxury Lexus brand were each up 3.6%.

 

With the strong sales performance, Toyota surpassed Ford in July as the nation's second-largest automaker for the month, behind only GM.

 

Toyota's passenger cars were weak, down 12% for the month, while sales of crossovers, pickups and SUVs rose 17%.

Despite the extreme declines at the domestic OEM's, the overall SAAR continued to hover around 17mm units, reaffirming, at least for now, Ford's assertion that sales will 'plateau' at current levels.

 

That said, overall inventory levels remain elevated despite the fact that incentive spending set a new record  of $3,876 per unit in the month of July.  Per J.D. Power:

Average incentive spending per unit to date in July is $3,876 per unit, a record for July, and surpassing the previous high for the month of $3,597, set in July 2016. Spending on trucks and SUVs is $3,700, up $194 from last year. Spending on cars is $4,174, up $436.

 

Incentives as a percentage of MSRP are at 10.8% so far in July, exceeding the 10% level for 12th time in the past 13 months

 

Meanwhile, GM's inventory continues to be the most bloated of all the OEMs with 939,831 cars still parked in dealer lots all across the country...equal to 104 days of supply.

 

Of course, as silly as it may seem, some analysts still found a way to be upbeat about the industry.  Per Detroit News:

“The fundamentals in the industry are still very, very strong,” said Kelley Blue Book analyst Alec Gutierrez. Big-picture indicators like fuel prices, employment levels within the industry and customer satisfaction are all at healthy leavels.

 

At a gathering of auto officials in Traverse City on Tuesday, several analysts delivered a similar message on the state of the industry: “The sky is not falling.”

 

Jeff Schuster, senior vice president of global forecasting for LMC Automotive, said despite sales numbers out of North America, there are reasons for optimism overall.

 

“Transaction prices are up, that’s a very positive thing…,” he said. “We’re looking at over $31,000 on average – up over a percent.”

But Ford and GM shareholders are starting to lose faith...

 

...as are investors in the suppliers.

 

Oh well, we're sure this is just a temporary pause...the second half is sure to be better.

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gilhgvc's picture

you want to bring car and truck prices DOWN? stop buying thier over priced crap

Uchtdorf's picture

No worries. The market will adjust when the next war comes along and we'll all marvel at how quickly the Silverado production line is refitted for military vehicles. Winning....not.

tmosley's picture

Heavy and armored military vehicles are a thing of the past.

Light, cheap, and numerous is the future.

Not much you can do when the drones block out the sun, and they are programmed to seek and destroy all soldier aged males within a given region.

espirit's picture

The RFP for an algo to identify a rifle carrying individual a mile-and-a-half out at a 45 degree angle went out quite a while ago.

Son of Loki's picture

bad news is good for another stawk market high tomorrow.

HelluvaEngineer's picture

I own too many cars at the moment, admittedly, but they are all paid for.

Anyway, my most recent purchase is an '84 Chevy with the 6.2 diesel.  It wasn't running so I got it for $2000.  Spent $600 in parts and upgrades plus my time.  Got it running and it runs great.  No power amenities but built to last a lifetime and a bad ass 4x4 system to boot.

Why the hell can't they build something like that today for under $20k?  These construction guys running around in $60k diesels are friggin retards.

shizzledizzle's picture

Got a 94 with the 6.5 turbo. Solid truck and nearing 300k. Gets 15-18 mpg pulling my camper. The downside is the cost to rebuild the engine is more than I have in the truck.

HelluvaEngineer's picture

Might consider looking for a used one out of a HMMWV (Humvee).  Hell your "tax dollars" paid for it.  Might as well get a price break.

python_snake's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it.!pa68d: Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2f0fLIz

Hal n back's picture

Epa regulations preclude building them like they used to.

Pretty soon we wil be driving enclosed mopeds, even with Camry's getting 40 mpg

CJgipper's picture

Yeah, and you can take a new 6.7L dodge cummins that gets 16mpg, rip out all of the emissions crap, and get 20mpg.  

 

You will NEVER convince me that burning 20% more fuel is good for the environment.

Doom Porn Star's picture

I guess the TrannyCorps will have to be 'de-ployed' on brightly painted vespas and atvs.

gregga777's picture

He is correct in his assessment. A $1,000 RPG can put a multimillion dollar M1A1 Abrams main battle tank out of action requiring a visit to the Lima Ohio Tank Plant for rebuilding.

An M2 Bradley was blown up by an IED in Iraq and the heavy bottom plate of the vehicle was found some distance away from the wrecked vehicle. Anti-tank weapons are getting cheaper with better guidance. It's not possible to up armor a vehicle to deal with all threats. Weapons that target the top of armored vehicles are particularly nasty.

Also, armored vehicles are virtual sitting ducks to dismounted infantry with AT weapons if not accompanied by their own dismounted infantry.

espirit's picture

Seems to be a run on Ford spare parts. Thefts of Ford tailgates in the Miami area are unprecedented, locks circumvented, and with back-up cams cost upwards of $8000 to replace.

Wonder if they end up as scrap steel?

Win/win for Ford and the insurance industry.

Canadian Dirtlump's picture

I've always said, the best defense is to negotiate the right price. That being said I'll be looking used for something fairly quickly here, with the off lease bomb set to further blow a hole in the industry.

 

Grand Cherokee 5.7 is top pick, with a silver twin turbo explorer being the other possiblity for juvenile reasons. The story here is stupid credit more than it is shitty cars.

Juggernaut x2's picture

Chrysler/Jeep quality is absolutely abysmal

Canadian Dirtlump's picture

I have a 2011 ram with 363 thousand kms on it and haven't had a problem with it. Nor have I had a problem with my Challenger SRT8. My borhter has a 2012 300c which he's had no issues with. I'll probably continue to press my luck as for SUVs I'm not interested in lifted minivans. I won't apologize for what anyone writes about them, but I've had no problems with domestic vehicles.

44magnum's picture

06 dodge magnum outer tie rods ends every 9000 miles, only car i ever bought an extened warrenty on thank god.

YourAverageJoe's picture

My 2002 Silverado has 235k on the clock and runs like new.

I had a guy at the Discount Tire look at it when I was getting tires put on and when he checked the mileage, he said: "Yup, it's a Candian made GM truck.Those are the best."

I never knew that. My brother in law  has a 2000 GMC Sierra, also Candian built, that is still towing his boat.

 

Apparently, you Canadian fellas know how to build a truck!

Chauncey Gardener's picture

Had a 92 Dodge Caravan ES built in Canada. Absolutely bulletproof. 

Last of the Middle Class's picture

abysmal on a really really good day. Be VERY careful fooling with those things. Worse than a Mitsubishi trooper tranny with 150,000 miles on it, and that, my friend, is bad.

Lore's picture

Re: "Chrysler/Jeep quality is absolutely abysmal"

That's what I was going to say.  My boss's new 2017 Cherokee seems to be a real lemon, constantly in the shop.  It looks rinky-dink too, but of course I keep my mouth shut. 

TahoeBilly2012's picture

I want a Sprinter 4x4 and there is just zero deals to be had yet on those.

Canadian Dirtlump's picture

I would make friends with someone with access to the ADESSA dealer network and just keep a lazy eye open on them at auctions.

shizzledizzle's picture

Recently purchased an 09 camry with 80k on the odometer with maitenance records. Considering I work on the road it will pay for it's self in fuel economy and it is quite comfortable on the long hauls. Just did my first oil change and put mobil 1 full sythetic in it. I would be surprised if I get less than 300k out of it. Got it for a song. 

Ntoxic8ingWave's picture

One of the many bubbles that are primed to pop. Get your weenies and smores out for the grand collapse!

 

Chauncey Gardener's picture

“The fundamentals in the industry are still very, very strong,” of course they are. Yeah, right.

Peak Finance's picture

Hnmmm, why did they put ISIS and Al-Q into HiLux trucks and not GM's?

Someone messed-up I think!

 

Peak Finance's picture

Look government, it's not that hard to figure this out

Government send ISIS some Gm's  (don't waste nice Hilux on terrorists!) 

Other branch of government blows them up

OMG! Now they need more GM's! 

Beter than cash for clunkers!

Winston Churchill's picture

Send them TESLAs, its a twofer.

Canadian Dirtlump's picture

are standard issue north american market full sized pickups commonly procured there? I didn't think many were exported there?

sinbad2's picture

Because GM's wouldn't cut it in harsh conditions, the US wanted ISIS to win, giving them GM's would have ensured their defeat.

Angry White Guy's picture

Who wants to make a payment on a piece of shit that's at least $20k over priced?

Juggernaut x2's picture

New GM promotion- buy an iPhone7/get a Chevy Tahoe for free 

Last of the Middle Class's picture

$50,000 for a Tahoe. i laugh every time I see one of those things roll down the road. I see them all day long 2 years old with worn out tires. The owners (drivers) don't even rotate them, much less consider putting some new rubber on them. Shit they just trade up for some more debt. This is NOT going to end well.

 

Berspankme's picture

Neighbor bought an Escalade. Sticker over 90k. I call it an IQ test

CJgipper's picture

50?  Buy it.  You can resell at 60 and save someone 10k pocketing 10k in the process.

Canadian Dirtlump's picture

The funniest promotion I've seen here is buy a new titan get a versa for free.Ignoring that you'd be better off taking 15-20k off the price of the titan and driving off.

 

I have good access to the fleet departments of most manufacturers thanks to my work here so our standard "deal" is invoice minus rebates plus a couple hundred bucks. Perfectly fine for the price being a phonecall away versus trying to play hardball with some guy who came from a furniture store and needs to rob / rape every buyer.

bub's picture

Nissan vehicles are so goddamm ugly.  

Bai Suzhen's picture

Check out the C/D long term Titan write up.  Their example is self destructing, and the dealers can't figure out why, and how to fix it.

wisehiney's picture

oBUMMer/hitlery and socialist fed pumped it as hard as they could to get hitlery elected.

.gov buying all of the shitty auto paper you know.

It's all over now.

Restorative_Ally's picture

With US working age population hitting peak and declining, as well as retired population per worker skyrocketing, it really should come as no surprise that this thing is going to fly apart spectacularly. And soon. 

Son of Loki's picture

I agree. My dad is semi retired and still drives his Honda with 165,000 miles on it. I plan to do the same with mine. I will never overpay for a vehicle even if i have to negotiate with them for weeks. Most dealers are POS to deal with but that's life.

It will save you money to take the time to wait and make them come down in my experience. Most of these vehicles are simply not worth anything near what they ask for them

CJgipper's picture

Go check the book value of a 2008 dodge ram mega cab 4x4 diesel 3500 dually with 200k miles.  I'll wait.

 

KBB 12k

NADA 22k

 

Someone's lying, and I don't think it's KBB.

 

 

I'm watching a bunch of cars on autotrader, and they're just sitting as they dealers drop the price 1k/mo or so.

Berspankme's picture

True. Dad bought his last car when he retired at 65. He died at 88. Before that new every 3 yrs

Two Theives and a Liar's picture

Some of the vehicles on offer from these companies are laughable. Seriously. The European Diesel Ford Fiesta gets 65 MPG. US consumers would love a taste of that, but dumb-ass Ford won't bring them over from the UK where they are made. 

 

Peak Finance's picture

Nope, not Ford, it's the EPA! 

Those 65mpg Fords don't and can't meet US Diesel Emission standards. 

Yes, believe it or not, the Euro-Socialist Utopia actually has LESS emissions requirements and more sensible Environmental laws than US despite the higher pop density. 

sinbad2's picture

Yeah, but those diesels tend to blow up, and are very expensive to repair.

GM and Ford stick to the cheap and nasty end of the car market.

HRH Feant2's picture

Ford needs to bring back the Ranger. It was affordable and a good basic truck. I know several professional's that use older models for their work truck. (Landscaper and painter).

serotonindumptruck's picture

I owned three Ford Rangers back in the 1990's.

That particular model was planned obsolescence in practical application.

Between 80 and 100 thousand miles, parts and components began to sytematically fail. Heater core, ignition switch, and ruptured thermostat housing were common.

There's a reason why you don't see many Ford Rangers on the road these days. 

Edit: I've maintained my vehicles well my entire life, changing oil every 3K miles, run high-octane fuel most of the time, and other routine maintenance as necessary. The Ford Ranger was a POS.