Each month automotive industry experts from Cox Automotive and its brands host a sales day commentary call to provide insights into the previous month and to answer media questions related to market movement. The audio for the most recent call which covers the April selling month is available.
Below is written commentary from our industry experts covering a range of topics including consumer confidence, OEM and segment performance, shopping behaviors and sales volume.
From Karl Brauer, executive publisher for Autotrader and Kelley Blue Book:
“Over the past 6 months we’ve watched nearly every automaker go from positive to negative sales volume, confirming the plateau in this latest sales cycle. The last time we moved into negative territory it was part of an overall economic downturn that was accompanied by massive disruption across the auto industry. This transition should be much smoother, with ongoing near-record sales supported by strong economic indicators. The big shift this time, however, is the rapid drop in sedan sales as SUVs stake their claim as the hot ticket. Automakers will continue shifting resources to accommodate this new buying trend in the coming years, which in and of itself could prove disruptive.”
From Jack Nerad, Executive Editorial Director, Kelley Blue Book and KBB.com
“Consumer confidence is at a high level and wages showed an increase in April, yet car sales didn’t reach the level of April 2016. Since the economic news is largely positive, one explanation is the lack of compelling new models to prompt consumers to hit the showrooms. Instead, consumers are confronted with a vast array of vehicles, financing options and lease offers that leave many uninterested or simply frozen in place.”
From Rebecca Lindland, executive analyst for Kelley Blue Book:
“Consumers continue to demonstrate confidence in the economy and jobs market, purchasing vehicles at near-record numbers amongst a bounty of incentives, lease offerings, and technology-packed sport utilities. But those purchases have led to ever-increasing average transaction prices, and our research shows affordability continues to be obstacle for many consumers, especially those in the middle class. The challenge for consumers is to not fall for longer loan terms and get in over their heads, and the challenge for manufacturers is to balance pricing with residual values, so there’s no backlash in a few years when leases come flooding back.”
Lindland on Pickup trucks
“GM and Ford had another strong month for pickup sales. Ford Super Duty’s transaction pricing was a stunning result – up $8,400 year over year to $58,200 – and GM reported that nearly half of all Sierra Heavy Duties were Denalis, proof that luxury isn’t defined by a brand name anymore and buyers are willing to spend for technology, utility, and capabilities.”
From Michelle Krebs, executive analyst for Autotrader:
“As expected, April car sales are down from a year ago, with some automakers off a bit from forecast. The refrain remains the same: the sales cycle has plateaued; incentives are plentiful; and sport utilities dominate over cars. For perspective, though, this year’s sales still are expected to be around the 17 million mark, only the fifth time in history we’ve hit that number. Most economic factors – consumer confidence, employment, stock market, interest rates and gas prices – are favorable and point to another good year for the U.S. auto industry.”
Krebs on GM
“General Motors’ position should improve throughout the year as it rolls out new crossover vehicles, including the high-volume Chevrolet Equinox and Chevrolet Traverse – two models aimed at the heart of the SUV market.”
Krebs on FCA
“When Jeep is down, Fiat Chrysler is down. Jeep is in transition mode, selling down some models and later introducing others. The same is true for the most of Fiat Chrysler, which is ditching many cars.”
Krebs on Toyota and Nissan
“A couple of interesting items of note. First, in a sign of the times, with the shift from cars to sport utilities, the Toyota RAV4 outsold Camry in April. Also, Nissan North America, which has bucked the trend of dropping sales, posted its first sales decline since October.”
From Brad Korner, general manager for AIS Rebates:
“Incentive programs remained plentiful in April, consistent with the first quarter and with focus on slow-selling sedans and alternative-fuel vehicles as well as with market share defending incentives on profit-rich pickup trucks. Automakers are aggressively promoting long-term 0% interest through their captive finance companies to lure in consumers. For the best deals, though, smart buyers should investigate upfront incentives combined with the captive’sstandard interest rate as well.” (AIS Rebates, a Cox Automotive company, is an industry leader in rebate and incentive research, publication and analysis.)
From James Grace, Sr. Director, Analytics Product for Cox Automotive Media Solutions:
“Despite the high level of incentive spend across the industry, car shopping behavior on Dealer.com run websites was down 8% in April compared to March. The mix between new and used stayed relatively consistent, as did shopping traffic across all body styles. We’re basically just seeing online shopping volume down across the board.” (Dealer.com, a Cox Automotive company based in Burlington, Vt., runs 62 percent of the nation’s dealer websites).