Cox Automotive Industry Commentary

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 June selling month is available.

Below is written commentary from our industry experts covering a range of topics including sales volume, OEM and segment performance, shopping trends and incentives.

From Michelle Krebs, executive analyst for Autotrader:

“June illustrated yet again that Americans may have fallen out of love with cars but remain mad about utilities. Most vehicle makers reported significant declines in car sales consistently through the first half of 2017, while SUV sales were up substantially. We see no end in sight to what likely is a permanent shift in consumer preference.”

Krebs on GM: “General Motors exemplifies the vast divide in the market between cars and SUVs. Chevrolet Cruze and Malibu cars are down 30 percent or more while Chevrolet Equinox and Traverse SUVs are up by as much or more. And, on another note, anyone wondering if a Chinese-built vehicle could sell in the U.S. should look at the Buick Envision utility. About 5,000 were sold in June, roughly as many as the U.S.-built Cadillac XT5.”

Krebs on Jeep: “What’s going on with Jeep? Indeed, Jeep is juggling around some model changeovers, but is there a deeper issue? The SUV craze in right in Jeep’s wheelhouse but it is not capitalizing on it at the moment.”

From Rebecca Lindland, executive analyst for Kelley Blue Book:

“The automotive industry continues to put up very good numbers, even in a post-peak market era, with June SAAR in the 16.5 million range. Consumers are flocking to SUVs and foregoing cars, but manufacturers have plenty of excellent product out there to satisfy this demand. Only concern is rising inventories for cars, which could result in further production cuts later in the year.”

Lindland on Ford: “Even with a third of its sales fleet, Ford cars continued a free fall, down 23% for the month and off 20.2% through the first half. The Ford Escape came within a 100 units of outselling Ford’s Fusion, Taurus, and Mustang – combined. The second half of the year doubles down on SUV and truck sales with the new Ford Expedition and Lincoln Navigator, so cars will continue to suffer and inventory – currently 82 days – will need to be carefully managed, likely by production cuts.”

Lindland on FCA: “Given its focus on SUVs and pickup trucks, FCA’s results are disappointing, down 7% for the month and year to date. Jeep brand continues to feel the effects of the Patriot/Compass changeover. Dodge had a tough month with soft sales of the Durango and aging Journey, but Ram’s pickup and van sales are bright spots.”

Lindland on GM: “General Motors continues to exhibit discipline with fleet sales, which accounts for about 20% of sales year to date, but inventory is far too high at 105 days so I’m definitely going to watch for production cuts.”

From Charlie Chesbrough, senior economist and senior director, Industry Insights, Cox Automotive:

“June’s sales number reaffirms that the US vehicle sales cycle is in a post peak phase. The US economy remains strong – confidence is high, unemployment is low – and this will continue to support vehicle demand over the near-term. But higher interest rates and uncertainty around fiscal policies will slow economic growth, and may become headwinds for automotive sales. Cox Automotive expects 2017 light vehicle sales to finish near 17.1 million – down from last year’s record, but still a robust market.”

From Michael Harley, group managing editor, Kelley Blue Book, Autotrader, Dealer.com:

Harley on FCA – “The Italians continue to deliver only a trickle of North American sales to FCA, representing less than 2% of June volume combined. Fiat 500 sales have plummeted, despite aggressive retail programs, with the low-volume Spider convertible the brand’s only bright light. Alfa Romeo sales have been buoyed by the new Giulia sedan, which is carrying the brand until the Stelvio crossover arrives in showrooms.”

Harley on GM – “GM’s Bolt EV and Volt plug-in hybrid earn rave expert reviews, but consumers still have yet to embrace either of the energy-efficient vehicles — the traditional truck-based Suburban SUV, which is only sold with a large V8, effortlessly outsells the two combined despite green incentives.”

From Brian Moody, executive editor, Autotrader:

“At this point, it’s pretty clear any automaker without a ton of small SUVs is missing the boat. Congratulations to GM who saw this coming and has packed Chevy and Buick with good, small SUVs. In this market right now, all-new is also what consumers want – Audi A4, Acura TLX, Cadillac XT5, Cadillac CT6, Nissan Rogue Sport. Buyers clearly want the newest and latest when making the second biggest purchase of their lives, just as they do when it comes to tech.”

From James Grace, senior director, Product Analytics, Cox Automotive Media Solutions Group:

“Consumer shopping activity on our Dealer.com websites – measured as clicks on vehicle description pages – dropped 6% from the May timeframe, but is still running 4% higher than year-ago levels. SUVs still dominated consumer interest this month, with sedans traffic dropping even further.” (Dealer.com, a Cox Automotive company based in Burlington, Vt., powers 62 percent of the nation’s dealer websites.)

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

“Despite a significant increase in the number of incentive programs going into the long July 4th holiday, many automakers held down incentives for much of June as they were getting inventory levels under control. One trend we’re seeing is that automakers are committing incentive money directly to dealers. While it is not guaranteed cash for buyers, it should help dealers create the best deal scenarios for individual buyers.” (Cox Automotive’s AIS Rebates is an industry leader in rebate and incentive research, publication and analysis.)