General Motors, FCA US, Toyota Motor Corp. and Hyundai posted lower third-quarter sales, with GM, Toyota and Hyundai racking up gains in September to finish the quarter on a high note, in more signs the market is steadily rebounding from the coronavirus.
Deliveries dropped 9.9 percent last quarter at GM, with sales improving “sequentially” each month, the company said Thursday. Volume declined 11 percent at Chevrolet, 5.7 percent at GMC, 2.9 percent at Buick and 18 percent at Cadillac.
GM said the seasonally adjusted sales rate for the third-quarter is expected to tally 15.9 million, including medium and heavy duty trucks, in another sign the market gained momentum as the quarter wrapped up.
“Industry and GM sales rebounded significantly in September, finishing the month with year-over-year sales increases,” the nation’s No. 1 seller, which no longer reports monthly results, said in a statement.
FCA US said third-quarter volume dropped 10 percent, with strong retail sales offsetting “ongoing softness in fleet purchases.”
Volume dropped 9 percent at Jeep, 2 percent at Ram, 31 percent at Dodge and 53 percent at Fiat last quarter. Only the Chrysler brand, up 8 percent, and Alfa Romeo, with an increase of 17 percent, posted gains during the period, FCA said.
U.S. retail sales of the Ram pickup truck rose 15 percent last quarter.
“Jeep and Ram are hot and we continue to prioritize deliveries to our dealers who are asking us to ship as many vehicles as we can build,” said Jeff Kommor, head of U.S. sales for FCA US.
Third-quarter volume dropped 11 percent at Toyota Motor, with sales off 13 percent at the Toyota division but up 2 percent at Lexus. The automaker’s September sales rose 16 percent, with deliveries up 14 percent at Toyota, fueled by strong Highlander and RAV4 demand, and 31 percent at Lexus.
Hyundai reported third-quarter U.S. sales of 170,828, a 1 percent decline from a year ago.
In September, volume rose 5 percent to 54,790 cars and light trucks, behind a 21-percent gain in retail deliveries.Third-quarter retail volume tallied 161,254, a 7 increase over 2019, the company said.
Hyundai has countered lower fleet business with stronger retail sales driven by an expanded crossover lineup, even as it spends less on incentives. (See chart below.) The company said fleet sales dropped 67 percent in September and represented 5 percent of overall volume.
Most other automakers will report third quarter and September U.S. auto sales later Thursday. Ford Motor Co. will release third-quarter results on Friday. Daimler and Jaguar Land Rover are expected to release results later in the month.
September sales are projected to get a boost from Labor Day holiday volume and two extra selling days, providing a final boost to third-quarter volume.
U.S. light-vehicle deliveries fell 22 percent to nearly 9 million through August, Cox Automotive and J.D. Power say.
The market continues to rebound from the coronavirus pandemic, though low inventories, tighter credit standards for some consumers and high unemployment continue to be a drag.
Cox Automotive estimates industrywide inventories currently stand at just 57-58 days, below the industry’s longtime 60-day benchmark.
The seasonally adjusted, annualized rate of sales for September is forecast to come in at 14.8 million to 15.7 million, based on forecasts from TrueCar/ALG, Cox Automotive and LMC Automotive. The SAAR tallied 15.2 million in August and 17.3 million in Sept. 2019 and has inched up every month since bottoming out at 8.74 million in April, according to Motor Intelligence.
Reflecting lean stockpiles, September incentive spending is expected to fall $250 to $3,964 per vehicle — the lowest level since July 2019 and the first time this year it has dropped below $4,000 — J.D. Power said. ALG estimates incentives averaged $4,001 last month, a 5.3 percent increase over Sept. 2019. (See chart below.)
In addition to lean inventories, the industry faces other headwinds heading into the fourth quarter. The prospect of another wave of COVID-19 infections, coupled with the start of flu season, could undermine the rebound.
And the outcome of talks in Washington on another round of economic stimulus, as well as uncertainty surrounding the presidential election, could also weigh on household spending.
While retail demand has rebounded, fleet shipments — an industry bright spot for several years — remain depressed as rental agencies continue to curtail or cancel orders.
Fleet volume is not expected to fully recover until mid to late 2021, when business and leisure travel resume, pending the broad rollout of a vaccine, some analysts argue.
“The last piece of the puzzle for the industry’s recovery is fleet sales,” said Edmunds analyst Jessica Caldwell. “Daily rental companies have understandably reduced or delayed orders as Americans continue to stay at home rather than embark upon business or air travel. It will likely take a bit longer for this side of the business to make as dramatic a comeback as its retail counterparts.”
There were 25 selling days last month vs. 23 in Sept. 2019.
Lease penetration in September is expected to be 26.5 percent, a decline of 2.8 percentage points from September 2019 and the lowest September level since 2014, J.D. Power said.
2021 models represent just 3 percent of available inventory, Cox Automotive said this week, compared to 25 percent of dealer stockpiles that were 2020 models in Sept. 2019. Plant shutdowns have delayed many products and limited availability of others.
Average transaction prices are projected to rise 3.5 percent, or $1,223, to $36,541 in September from a year ago, and up 0.4 percent, or $156, compared to August 2020, ALG estimates.
Fleet sales are expected to total 130,300 last month, a decline of 52 percent from September 2019, J.D. Power said. Fleet volume is expected to account for 10 percent of total light-vehicle sales last month, down from 20 percent a year ago.
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“Large truck sales continue to spike as many consumers gravitate toward home improvement projects to enrich their home environment where they are also working and spending more of their leisure time.” — Eric Lyman, chief industry analyst at ALG
“Third-quarter sales make at least two things apparent: Most of the doomsday scenarios forecasted at the beginning of the pandemic fortunately did not hold true, and the American consumer stepped up to become one of the many heroes in this chapter of resilience for the automotive industry. Consistently lower interest rates encouraged new-car buyers — who were less likely to be financially hindered by the economic fallout of the pandemic — to pull the trigger on a purchase.” — Jessica Caldwell, Edmunds’ executive director of insights
“Despite some uncertainties that could affect performance in Q4, one notable tailwind could be the return of customers to the market that took advantage of lease extension offers due to disruption from COVID-19. These customers that have traditionally replaced their vehicle at the end of their lease have been waiting on the sideline, getting ready for their next purchase,” — Thomas King, president of the data and analytics division at J.D. Power