March 2019 U.S. Automotive Sales

Our auto industry closed the books on Q1 2019 today, with total sales continuing in a downward path versus year-ago levels. Of the companies reporting, only Honda is bucking the downward trend.

The team from Cox Automotive offers the following commentary on the industry’s performance in March and through the end of Q1.Also, click here to watch a replay of a presentation our Industry Insights team gave last week on the key economic factors driving the auto market this past quarter.

From Jonathan Smoke, chief economist, Cox Automotive

The weakness in auto sales so far this year has been on the retail side. Incentives remain relatively low and auto loan rates have not improved, so consumers haven’t had a compelling reason to buy. This market looks like it’s heading into a normal, post-peak slowdown that was temporarily disrupted last year by tax reform.

The pool of people who can afford to buy a new vehicle is being reduced by higher prices and affordability concerns, and we’re likely seeing signs of that in the sales numbers. So far this year, average new vehicle loan payments are up 3.5% compared to last year, to $567, and average lease payments are up 2.8% to $500. As a result of multiple years of rate and price inflation, new vehicles payments have become a big hurdle, driving people into used cars, where the average loan payments is $414, up less than one percent from a year ago.

From Zo Rahim, manager, Economics and Industry Insights

With the sales rate off to a slow start, inventory is trending higher as it did through the second half of 2018. Supply of light trucks is increasing, pushing the overall, industry number upward. However, due to production cuts and product discontinuation, car supply is down, which has reduced the inventory of affordable vehicles consumers can choose from.

From Michelle Krebs, executive analyst, Autotrader

On FCA: This year was expected to be a more challenging one than 2018 for FiatChrysler, and that is being borne out in March. Only Ram brand sales rose, and they got a boost from the heftiest incentives among truck brands. Jeep sales dropped, up against some tough comparisons from last year. And Fiat? Well, with every passing month of lower sales, its future in the U.S. must be questioned.

On GM: Sales were down slightly more than we expected. GM is drawing down its car business so that played a part. It also appears the truck market is getting increasingly competitive. Ram beat Chevrolet Silverado in total truck sales in the quarter, albeit Ram was juicing sales with heavy incentives while Chevrolet showed restraint.

On Honda: Honda outperformed forecasts by posting a 4-percent gain in March. That’s particularly impressive since Honda does not focus on fleet sales and is always restrained in incentives. In addition, sport-utility sales were up, as were cars. Honda has been adamant it will stay strong in the car market while others – notably General Motors and Ford – drop out.

From Brad Korner, general manager, Cox Automotive Rates and Incentives

It’s one of the truths of our industry: Inventory levels drive incentives. Overall, in Q1 2019, while inventory is trending slightly higher, it’s under control and leading to less guaranteed incentive money being offered now versus first quarter last year. Looking at individual segments, we’re seeing fewer offers on cars, but more on SUVs and pickups. In the pickup truck battles being fought by Detroit’s big auto makers, Chevrolet’s new Silverado is helping GM hold down their incentive offers, while the Ram brand seems to be motivated, with the most money on the incentive table right now.

If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.