DETROIT – U.S. auto sales were expected to drop slightly in July as unusually hot weather — and softening demand — kept buyers at home.
Kelley Blue Book predicted a 1 per cent decline from last July to about 1.5 million new cars and trucks. Sales were strong at the beginning of the month thanks to Independence Day promotions, but weakened after that, KBB senior analyst Alec Gutierrez said.
General Motors’ sales fell 2 per cent while Ford’s U.S. sales fell 3 per cent. Toyota’s sales slipped 1 per cent. Fiat Chrysler’s sales were flat. Volkswagen’s sales fell 8 per cent.
Several automakers eked out sales increases. Hyundai’s sales were up 6 per cent and Honda’s sales rose 4 per cent. Nissan’s were up 1 per cent.
After six straight years of growth — and record sales of 17.5 million new vehicles last year— U.S. sales are beginning to plateau. In the first six months of last year, for example, sales were up 4 per cent, or more than double the pace of this year. But low gas prices, low interest rates, enticing new vehicles and strong consumer confidence should keep them at a very high level.
“We’re still at a healthy level as an industry,” Ford’s U.S. sales chief Mark LaNeve said Tuesday. “We’ll adjust our plans according to the reality and temper our expectations somewhat.”
Plateauing sales could be a good thing for consumers, since automakers are dialing up the discounts in order to hold on to their market share. TrueCar said industry incentives were up 5 per cent over last July to an average of $3,225 per vehicle. Ford, Volkswagen, BMW and Fiat Chrysler had the biggest increases over last July, TrueCar said.
But incentives are a dangerous game for automakers, since they hurt profits and resale values and artificially inflate demand. Gutierrez said automakers are approaching a level of incentive spending last seen during the recession, and that’s risky.
“The sky isn’t falling just yet, but we are on an unhealthy path,” he said.
General Motors Co. said its sales fell 2 per cent to 267,258. Chevrolet sales dropped but Cadillac, Buick and GMC all saw gains for the month. Sales of GM’s bestseller, the Chevrolet Silverado pickup, were down 4 per cent, but sales of the smaller Colorado pickup were up 27 per cent.
Ford’s sales fell 3 per cent to 216,479. Sales were down for both its Ford and Lincoln brands. The Ford Escape SUV, a perennial bestseller, saw a 10-per cent sales decline; Ford said inventories were low as it prepares to launch the revamped 2017 Escape. F-Series trucks sales were also down 1 per cent as Ford prepares to launch a new Super Duty pickup.
Toyota’s sales fell 1 per cent to 214,233. Toyota division sales were flat but Lexus sales were down 6.5 per cent. Toyota’s SUVs, like the RAV4 and Highlander, saw double-digit percentage increases, but low gas prices continued to hurt its cars. Sales of the hybrid Prius were down 29 per cent.
Fiat Chrysler’s sales were flat at 180,727. Jeep and Ram sales both rose around 5 per cent, but Dodge, Fiat, Alfa and Chrysler brand sales fell. One bright spot was minivans: Fiat Chrysler sold nearly 8,000 new Pacifica minivans and sales of the Dodge Caravan — which will eventually be discontinued — were up 28 per cent.
Fiat Chrysler said its sales numbers conformed to its new reporting standards. Last week the company revised five years’ worth of sales reports because they contained questionable figures. The government also is investigating charges that FCA inflated sales by pressing dealers to buy more vehicles.
Honda’s sales jumped 4 per cent to 152,799. Strong sales of Honda’s trucks and SUVs made up for an 8-per cent sales decline at its luxury Acura division.
Nissan’s sales rose 1 per cent to 132,475. Nissan’s car sales dropped 9 per cent, but strong sales of its trucks and SUVs made up for those losses. Luxury Infiniti sales fell 5 per cent.
Hyundai’s sales jumped 6 per cent to 75,003. Sales of the recently revamped Tucson SUV nearly doubled over last July.
Volkswagen, still stinging nearly a year after its diesel cheating scandal was revealed, saw sales drop 8 per cent to 28,758. One bright spot was the Tiguan SUV, which saw sales jump 40 per cent over last July.