Cox Automotive Industry Commentary: Sales Day April 2018

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.

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Automakers reported April 2018 U.S. sales today and there were a few surprises indeed.

Notably, May marks the first month that General Motors is not publicly reporting its results. Cox Automotive, however, is estimating GM April sales came in slight below our original forecast of a 0.2 percent increase. With the total market coming in slightly below our estimate and GM’s scaling back some of its incentives programs, Cox Automotive is now estimating that overall GM sales were down slightly versus April 2017.

Please find below commentary from the team at Cox Automotive. 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. We would be happy to help.

From Michelle Krebs, Executive Analyst for Autotrader:

(On FCA) “Jeep is back in the game. The brand’s painful transition of its products in 2017 is paying off big time this year, with the Jeep Wrangler – setting a monthly sales record – leading the charge.”

(On Ford) “Ford’s results demonstrate the importance of fresh products. Sales of the Lincoln Navigator more than doubled. Sales of the aged Escape dropped double digits. A new Escape and Explorer, coming soon, can’t arrive soon enough.”

(On Nissan) “Nissan clearly has embarked on a new strategy. The automaker was on a mission to achieve 10 percent market share or bust. However, rich incentives and hefty rental car sales, as has been Nissan’s practice in recent years, result in poor residual values.”

From Rebecca Lindland, Executive Analyst for Kelley Blue Book:

(On Ford) “Ford continues to pursue quality of sales over quantity, with a strong average transaction price in the face of weak sales figures, particularly on the car side, which could be a direct result of the recent announcement to discontinue Taurus, Fusion, Fiesta, and most Focus models. Lincoln continues to struggle, despite all the love shown to the Navigator.”

(On FCA) “What rising gas prices? Jeep continued to carry FCA, crushing last year sales by 20 percent. But all is not positive: the Chrysler 300 outsold the Fiat and Alfa Romeo brands combined. Granted, Alfa is on the rise, but will there need to be a day of reckoning for Fiat soon?”

From Karl Brauer, Executive Publisher for Autotrader and Kelley Blue Book:

“Most automakers were within 5 percent of last year’s numbers, with fleet often making the difference between positive or negative growth. This suggests some manufacturers remain willing to lean on fleet to stay in positive territory while others are letting natural market demand determine their fate. With two less selling days in April even the brands that were down slightly have a solid excuse. The big exception this month is Nissan, dropping over 28 percent on a combination of crumbling car demand, Altima changeover and what can only be explained as a massive cut in fleet activity. Nissan has been utilizing incentive and fleet sales more aggressively than other automakers for the last few years. It appears the company’s strategy has dramatically changed, with dramatic results.”

From Brian Moody, Executive Editor for Autotrader:

“It’s clear nearly everyone wants an SUV and those who want or need an SUV will have more and more choices in the coming months and years. However, bargain hunters should look to sedans. Cars like the Ford Taurus, Ford Fusion, Nissan Maxima, Chevrolet Impala are the best they’ve ever been and excellent deals will become more and more common as the shift to crossovers and SUVs continues. Shoppers considering lightly used or CPO sedans might want to check out a new before signing on the dotted line.”

From Charlie Chesbrough, Senior Economist for Cox Automotive:

“If we leave Nissan out of the story, the month looks fairly strong with a SAAR in the low 17 million level, as forecast. With two fewer selling days, the market was generally flat, or down only slightly. Nissan’s results, however, will negatively impact the SAAR for the month. Overall, the economy is relatively strong and supporting a healthy sales rate.”

From Zohaib Rahim, Research Manager for Cox Automotive:

“Nissan’s sales drop in April suggests the company is slowing down its aggressive fleet sales push. Previously, Nissan had mentioned fleet sales were driven by timing and the company clearing out 2017 inventories, and with Q1 2018 fleet sales up 23 percent it looks like April’s sales drop can be attributed to a shifting strategy.”

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

“Incentive activity has been consistent through the spring, delivering a steady rate of money and programs to the market. This indicates most OEMs are satisfied with the overall sales pace, absent of big adjustments or movements, which occur with slow sales or bloated inventory. We are, however, seeing a shift from guaranteed money to conditional money—programs focused on loyalty, conquest or lease-pull ahead incentives. Also, notably at Hyundai and Nissan, we’re seeing up-front cash reallocated to dealer cash, which allows dealers to be more flexible in closing a sale.”

(Note: “Up-front cash” refers to incentives often advertised and guaranteed to any buyer; “dealer cash” is money given directly to dealers to be used at a dealer’s discretion.)