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Truckin': Auto Sales Pivot Away From Cars In 2018

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Truckin': Auto Sales Pivot Away From Cars In 2018

It was another generally strong year for the auto industry, though it might be better described as the light truck and SUV industry.

Analysts said Americans used money freed up by tax cuts to buy new vehicles. Buoyed by a strong economy, corporate buyers also got in on new car fever, with fleet managers joining consumers to put more than 17 million sales on the books.

But American consumers weren’t buying cars as much as they were buying light trucks, SUVs and crossovers, with the share of cars as a portion of vehicle sales coming in at just 30 percent, its lowest point in U.S. automotive history.

While the industry and analysts said overall numbers were good, several automakers saw falling sales in 2018. Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM), saw yearly sales declines of 3.5 percent and 1.6 percent, respectively.

Fiat Chrysler Automobiles NV (NYSE: FCAU) posted a nearly 9-percent jump in sales.

While the numbers were mostly greeted as good news, the end-of-year, final quarter and December sales figures released Thursday showed the beginnings of signs of a slowdown.

Cox Automotive Senior Economist Charlie Chesbrough said GM saw its fourth-quarter sales numbers decline faster than its annual total, suggesting weakening demand.

“We are forecasting sales to slow further in 2019,” Chesbrough said. “For some automakers, the slowdown has already begun.”

Truck Sales Boost Industry

Cars took accounted for just 30 percent of sales for the full year — an all-time low.

Looking at just American automakers, the number is even more noteworthy. Cars represented less than 20 percent of sales in 2018 for Ford, GM and Fiat Chrysler.

“As expected, trucks are the big story for 2018,” Autotrader Executive Analyst Michelle Krebs said in a press release. She noted strong December sales for Fiat Chrysler’s redesigned Ram 1500 — up 34 percent for the month — and Ford's higher truck sales despite a production slowdown tied to a fire at a supplier's plant.

Companies with a strong light truck offering benefited from consumer interest. Honda Motor Company Ltd. (NYSE: HMC) said it had its best-ever annual and December light truck sales thanks to the Honda CR-V, which set its all-time monthly sales record. More than 42,000 of the compact crossovers rolled off dealer lots in December.

Tax Savings Shifted To Vehicle Purchases

While retail demand was down marginally in 2018, analysts said it would have declined more without a tax cut that boosted take-home pay.

“The key positive factor was stimulated demand from tax reform, which strengthened retail demand as the year progressed and also enabled strong gains in fleet sales,” said Cox Automotive Chief Economist Jonathan Smoke.

Autotrader's Krebs said lower taxes drove truck sales by prompting businesses to add to or freshen commercial fleets.

"Lower gas prices didn't hurt either."

High Transaction Prices

The average car price for the year — more than $36,000 — was up 3 percent over 2017, but much of that growth was due to one car: the Tesla Model 3. With Tesla left out of the average, the rest of the industry rose 2.5 percent, a result more in line with the past few years, according to Kelley Blue Book.

"Despite higher interest rates and incentives remaining flat year-over-year, this was the strongest growth in transaction prices since 2013,” Kelley Blue Book analyst Tim Fleming said. “Average transaction prices were boosted in 2018 by tax reform and low unemployment, as well as the rapid ramp-up of Tesla and its Model 3."

Fiat Chrysler

Fiat Chrysler reported 2018 sales of more than 2.2 million vehicles, an 8.5-percent increase over the previous year. Jeep sales, up 17 percent for the year, were the big driver.

December sales were up 14.3 percent, beating the Cox Automotive estimate of 10.5 percent.

General Motors

GM, the largest U.S. automaker, saw 2018 sales slide year-over-year by 1.6 percent and sold 2.95 million vehicles.

GM no longer reports monthly sales, but said Q4 sales were down 2.7 percent. 

Ford

For the year, sales were down 3.5 percent for Ford with a total of 2.5 million vehicles sold. 

Ford’s December sales were down 8.8 percent year-over-year, much more than the 4.5-percent monthly drop forecast by Cox.

Toyota

Toyota Motor Corp (NYSE: TM) sales were down 0.3 percent for the year at 2.4 million vehicles.

December sales were down 0.9 percent, better than the 1.3-percent drop forecast by Cox. While passenger car sales were down 15 percent in December, light truck sales were up 8 percent.

Honda

Honda sold 1.6 million vehicles in 2018, down 2.2 percent year-over-year.

Acura brand sales were rose 2.8 percent in 2018, boosted by the brand’s best-ever monthly and annual truck sales.

December sales were up 3.9 percent overall, crushing the Cox forecast of a 6.2-percent drop.

Nissan

Nissan Motor Co. Ltd. (OTC: NSANY) reported 2018 sales of 1.35 million vehicles, a 6.6-percent drop.

Nissan reported a surprising December sales increase of 7.6 percent, smashing the Cox estimate for a 6-percent decline in the final month of the year. Nissan's Rogue SUV had its best-ever month, posting a 5.9-percent sales increase.

Subaru

SUBARU CORP/ADR (OTC: FUJHY) had its best sales year ever, moving 680,135 vehicles in 2018, up 5 percent over 2017.

Subaru said it had its best-ever December as well, with sales higher by 1.9 percent over the same month in 2017 — but lower than Cox's estimate of 2.6-percent growth.

Hyundai Motor America

HYUNDAI MTR CO/GR (OTC: HYMTF) saw a 1-percent decline in sales for the year, moving a total of 677,946 vehicles. The South Korean automaker's SUVs set an all-time sales record, with consumers snapping up more than 300,000. 

The other good news for Hyundai came in December, when it saw a 3-percent year-over-year increase in the month for its best sales month ever. The increase was just short of the Cox estimate of 3.2 percent.

Volkswagen

Volkswagen AG/ADR (OTC: VWAPY) reported a year-over-year sales gain of 4.2 percent in the U.S. in 2018, selling 354,000 vehicles.

VW sales rose 5.8 percent in December, zooming past the Cox estimate of a 5.2-percent decline.

Tesla

Tesla Inc (NASDAQ: TSLA) reported 2018 sales of 245,240 vehicles, a 138-percent spike in the year when the electric automaker ramped production of the Model 3 sedan. Tesla does not report monthly sales figures.

Related Links:

Automakers Surge Past Street's October Benchmarks

Toyota Again Trounces US Peers In North American Auto Sales

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