August auto sales were pretty much a disaster this morning with every single OEM missing analyst forecasts.
Ford executives provided the most sobering commentary on future auto sales saying they believe sales have "reached a plateau" and will be "at a lower level" in 2017. When questioned on the notion that sales had "plateaued," Ford noted that "we're no longer in a period where we have a lot of pent-up demand coming out of the financial crisis." Ford also noted that retail incentives continue to run at "historically high levels." Below are some of the key comments from Ford executives describing the current conditions in the auto market:
"For the remainder of the year, we continue to see retail in the industry provide incentives still running at historically high levels, but down versus the record that we experienced in 2015. Looking ahead to 2017, we continue to see industry sales are strong, but at a lower level than this year."
"Sales have reached a plateau."
"It's just that we're no longer in a period where we have a lot of pent-up demand coming out of the financial crisis. So that's why, I think we use the term plateau"
"Comparisons for the rest of the year are going to be really tough."
Ford also noted that dealer inventory ballooned to 81 days this August compared to only 62 days last year. Moreover, fleet sales to rental companies were down 32% YoY. Meanwhile, Ford's largest vehicle lines were all down YoY, including: F-Series down 6.1%, Escape down 2.8%, Explorer down 15.5% and Fusion down 32.6%.
Meanwhile, GM also missed with overall sales down 5.2% vs. estimates of -4.9%. Dealer inventory also increased for GM to 74 days from 66 days last year. Meanwhile, GM's popular pickups were also down YoY with the Silverado down 4.7% and the Sierra down 17.7%.
The other OEMs didn't do any better:
Weak sales came in spite of massive YoY increases in incentive spending with Ford, GM and Chrysler all up 18.0%, 7.9% and 16.0%, respectively.
Incentive by Automaker pic.twitter.com/X9JJVKVCMq— Don Draper (@DonDraperClone) September 1, 2016
Of course things could always be worse. Venezuela sold a total of 193 cars in July (that's 193...not in thousands...just 193) after they thought they'd plateaued from 2009 - 2013.
That's the crazy thing about "plateaus" there's a cliff on both sides.