July U.S. Auto Sales - The Good, The Bad, & The Downright Ugly

Ford (-3.0% vs. -0.5 est), GM (-1.9% vs. -1.0 est) and Fiat Chrysler (+0.3% vs. 1.9% est) all posted headline misses on July auto sales with a modest "beat" from Toyota (-1.4% vs -1.9% est) even though its sales were still down YoY.  Looking past the headlines, however, the data is even worseFord sales to retail customers (i.e. stripping out fleet sales where they make no money) were down 6% while Fiat Chrysler was down 2%.  GM managed to grow retail sales 5% YoY but only after increasing incentive spending 29% over the competition to 14.2% of total retail value....WINNING!  Ford and GM stocks were punished on the misses.

According to headline data, truck sales took a big leap higher in July...but the devil is in the details.  Most of the truck gains for Ford came from cargo vans which were up 35% YoY while its F-Series pickup truck was down 1% and SUVs were down 5.3%.  GM posted higher unit sales of trucks, albeit on higher incentive spending, but mix shifted from the higher MSRP Silverado (units down 4% YoY) to the lower priced Colorado and Canyon models which were up 27.5% and 33.1%, respectively.  Chrysler reported a 2% YoY increase in Dodge Ram sales.

Wards Data

 

Overall, July sales were slightly positive YoY but stripping out fleet sales would paint a very different picture.

July Auto Sales

 

Inventory-to-sales remained near all-time highs excluding the 08/09 recession.

 

Auto Inventory

 

Investors punished Ford and GM stocks for their efforts.

Ford and GM

 

Please see below for additional thoughts on company-specific performance:

Ford - Ford posted a big miss at -3.0% YoY vs. consensus of -0.5%.  Retail sales showed a terrible decline of 6% YoY which were offset by 6% growth in less profitable sales to rental companies and government agencies.  Overall Ford sales were certainly boosted by GM's 42% decline in fleet sales.  The key money makers for the OEM were down across the board YoY with SUV sales off 5.6% (Explorer down 22%; Escape down 10%; Edge up 5%) and F-Series sales off 1%.  Ford said average pricing per vehicle grew $1,600 YoY primarily on mix shift.

GM - GM also posted a big miss at -1.9% YoY vs. consensus of -1.0%.  GM estimates their market share grew 1% in July to 17.9%.  GM retail sales came in at +5% YoY and fleet sales down a massive -42%, which they described as "plan".  Retail sales growth came at a substantial cost to the OEM with incentive spending for July way up to 14.2% vs. an average of 11.0% for the industry overall as GM sought to clear out old inventory.  Days of inventory on dealer lots declined MoM to 66 days from 72 days. 

Fiat Chrysler - Fiat Chrysler posted a miss at +0.3% YoY vs. consensus of +1.9%.  That said, the headline number was driven by fleet sales with retail sales down -2% YoY and lower-margin fleet sales up +22%.  Popular Jeep lines struggled with Wrangler down -5% and Cherokee down -12% while Ram trucks increased +2% YoY.

Toyota - "Beat" with sales of -1.4% YoY vs. consensus of -2.9%. 

Honda - Beat with sales of +4.4% YoY vs. consensus of -0.4%. 

Nissan - Missed sales of +1.2% YoY vs. consensus of +3.0%. 

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