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July auto sales missing analyst estimates in early results

🕐 3 min read

Ford and General Motors reported U.S. light-vehicle sales in July that fell more than analysts had anticipated while Nissan and Fiat Chrysler gained less than expected, reinforcing concerns that the market may have peaked with last year’s record deliveries.

GM, the largest U.S. automaker, said sales slid 1.9 percent, after analysts projected a 1 percent drop. No. 2 Ford reported 215,268 light-vehicle sales, according to Bloomberg’s calculations, for a 3 percent decline that was wider than the 0.5 percent decline predicted by analysts. Nissan reported a 1.2 percent increase, short of the 3 percent rise projected by analysts.

Fiat Chrysler said its sales rose 0.3 percent; analysts had projected a 1.9 percent gain. Honda Motor Co. surprised with a 4.4 percent increase after analysts projected a 0.4 percent decline.

Those four were the first to report for a month in which analysts projected that the industry’s seasonally adjusted selling rate was 17.6 million vehicles, little changed from a year earlier.

“It’s been six years of unprecedented growth and it had to come to an end,” said Michelle Krebs, a senior analyst with research AutoTrader, said in an interview. “The big question now is: How deep does it dip and how long does it dip? And I can’t answer that.”

Ford’s sport utility vehicles had a rare down month, dropping 5.6 percent in July. Explorer sales were off 22 percent, while the Escape compact SUV fell 10 percent. F-Series pickup sales dropped 1 percent. Ford said sales to fleet buyers rose 6 percent while deliveries to individual customers fell 6 percent.

GM’s bread-and-butter Chevrolet division saw a 5.3 percent drop in total sales, though GM said the brand’s retail sales rose 3 percent. The automaker has been cutting back on sales to rental fleets in pursuit of better profit margins.

While Nissan brand sales rose 1.7 percent on strong light-truck demand, the company’s Infiniti premium line reported a 4.7 percent drop as car sales fell by more than a third.

The U.S. auto industry’s six-year climb from its lowest point since the early 1980s to record sales of 17.5 million last year finally may be coming to an end. Ford said last week it saw no growth ahead for U.S. auto sales as it reported a second-quarter profit that fell short of analysts estimates. The industry is hoping for a long plateau at a healthy level, but the days of auto sales driving the U.S. economy appear to be over.

The sluggish economy may have finally found a way to dim its brightest light, as affordability has become the biggest impediment to buying a new car, according to a recent survey by AutoTrader. Its affiliate, Kelley Blue Book, said Tuesday that average new-vehicle prices rose 2.5 percent last month compared with a year earlier to $34,264.

“The people who could afford a car, got a car,” Krebs said. “If you look at stagnation of wages and the increase in the price of everything, cars included, there’s a lot of demand on household income that isn’t increasing.”

Automakers already have responded by boosting incentives to customers, with average discounts up 13 percent in the first half while industrywide sales rose 1.5 percent, according to researcher Autodata Corp.

“The competitive environment has increased as growth has slowed and the retail demand has weakened,” Ford Chief Executive Officer Mark Fields told analysts on the second-quarter earnings conference call July 28. “The bottom line is that we’ve seen a tougher pricing environment this quarter and we will face one going forward.”

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