Automakers' April US sales drop; Wall St. fears boom is over


Cars are seen in a parking lot in Palm Springs, California. - Reuters filepic

DETROIT: Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a fresh sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down.

The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But the two straight weak months is heightening Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since 2010 in the wake of the Great Recession.

General Motors Co shares were down 3.2 percent while Ford Motor Co slid 4.1 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.4 percent.

The U.S. auto industry is facing multiple challenges. Sales are slipping and their vehicle inventory levels have risen even as they have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars.

The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs?

"Inventory buildup is a top concern of automakers and all eyes are on whether cuts in production are enough to offset expected dips in sales," Jessica Caldwell, executive director of industry analysis at consultant and car shopping website Edmunds.

No. 1 U.S. automaker GM reported a 6 percent decline in April sales to 244,406 vehicles, but crossovers and trucks continued to see strong growth.

Sales at Ford, the No. 2 U.S. automaker, fell 7.2 percent in April, while Toyota <7203.T> recorded a drop of 4.4 percent and FCA sales were off 7 percent.

Over the past couple of years, U.S. consumers have increasingly shunned cars in favor of larger crossovers, SUVs and trucks. While automakers posted steep declines for car sales in April, SUVs, crossovers and trucks were either up or off slightly.

New vehicle sales hit a record 17.55 million units in 2016. But as the consumer appetite for new cars has waned, automakers have leaned more heavily on discounts. Analysts put the seasonally adjusted annualized rate of sales for April at around 17 million units.

GM said its consumer discounts were equivalent to 11.7 percent of the transaction price. The automaker also said its inventory level rose to 100 days of supply at the end of April versus around 70 days at the end of 2016.

Recent levels have worried analysts, and GM has promised inventories will be down by the end of 2017.

On a conference call Mark LaNeve, Ford's vice president for U.S. marketing, sales and service, insisted the industry was "relatively constrained" in offering discounts in April.

Ford car sales dropped 21 percent and trucks declined 4.2 percent, while SUV sales rose 1.2 percent.

Toyota's luxury Lexus brand posted an 11.1 percent slide. U.S. car sales at the Japanese automaker were down 10.4 percent, while truck sales were up 2.1 percent.

Nissan Motor Co Ltd <7201.T> said April U.S. sales were off 1.5 percent, but SUVs, crossovers and trucks jumped 11 percent.

Honda Motor Co Ltd <7267.T> reported a 7 percent decline in sales in April, with cars off 7.4 percent and trucks up just 0.8 percent. - Reuters

Get 30% off with our ads free Premium Plan!

Monthly Plan

RM13.90/month
RM9.73 only

Billed as RM9.73 for the 1st month then RM13.90 thereafters.

Annual Plan

RM12.33/month
RM8.63/month

Billed as RM103.60 for the 1st year then RM148 thereafters.

1 month

Free Trial

For new subscribers only


Cancel anytime. No ads. Auto-renewal. Unlimited access to the web and app. Personalised features. Members rewards.
Follow us on our official WhatsApp channel for breaking news alerts and key updates!

auto , automotive , car , sales , wall street , boom , stocks , shares ,

   

Next In Business News

US crypto industry eyes possible day-one Trump executive orders
Starbucks workers expand strike in US cities, including New York
AirAsia in talks on aircraft purchases as part of expansion strategy
Coastal Contracts wins large-scale solar PV plant project in Sabah
Malakoff redesignates Che Khalib as non-executive chairman
Ringgit stages strong rebound to end losing streak against US dollar
HeiTech Padu appoints Hasrul Azuan as CEO
Dnex ties up with France-based Conex to streamline EU trade compliance for M’sian exporter
Capital A submits regularisation plan to exit PN17 status
TM and Perodua tie up to drive Malaysia's automotive transformation under NIMP 2030

Others Also Read