US automakers reported mixed US third-quarter sales, pointing to sluggish demand as consumers contend with affordability challenges and wait for lower interest rates to reach the car lending market.
The reports included a bruising 20 percent decline in sales at Stellantis compared with the year-ago period. General Motors experienced a 2.2 percent fall, while Toyota US sales dropped by eight percent.
On the other side, Ford, mustered a 0.7 percent increase, while Honda enjoyed an eight percent rise.
Auto experts have described the 2024 car market as a shift from the seller’s market of recent years.
Vehicle inventories are much more robust than during the pandemic and its aftermath, reducing the pricing power for automakers and reviving some incentive programs dormant in recent times amid lack of supply.
But prices are still well above pre-pandemic levels.
The average vehicle price in August was $47,870, down 1.7 percent from the year-ago level, but up 23 percent from the average transaction price in December 2019, according to Kelley Blue Book.
Buyers “are still facing affordability issues,” said Charlie Chesbrough, senior economist Cox Automotive.
– Smaller autos, hybrids –
At GM, sales were mixed among the truck and SUV products that have supported the Detroit giant’s profits in recent years.
Whereas GM scored an uptick in sales of GMC Sierra pickup trucks, its top-selling Silverado line experienced a dip.
Chesbrough said the Chevrolet Trax, a compact SUV, is the type of vehicle that has enjoyed growth this year.
Sales of the Trax, which begins at $20,400, approached 60,000 during the quarter, up 56.6 percent from the year-ago period.
Smaller pickups allow consumers to “keep the functionality but address the affordability issues,” Chesbrough said.
Ford reported Wednesday that US sales for the third quarter were 504,039, up 0.7 percent from the year-ago period.
The Detroit auto-giant’s sales benefited from a rise in demand for hybrid vehicles, with sales rising 38 percent to 48,101 and outpacing Ford’s growth in electric vehicle sales.
“The hybrid market is both larger and growing faster than the EV market in the US and companies that have invested in hybrid development such as Toyota, Honda and Ford are now reaping the benefit,” said Garrett Nelson, an analyst at CFRA Research.
At Stellantis, which has struggled to clear out inventory of pricier vehicles in the United States, sales came in at 305,294, down 20 percent.
The European company, whose brands include Jeep, Fiat and Peugeot, earlier this week trimmed its profit margin outlook, saying efforts to turn around its North American business accounted for most of the downgrade.
“At the beginning of Q3, we introduced an aggressive incentive program across our US brand portfolio that … resulted in the reduction of dealer inventory by over 50,000 units through the end of the quarter, said Matt Thompson, head of US retail sales at Stellantis.
“We continue to take the necessary actions to drive sales and prepare our dealer network and consumers for the arrival of 2025 models.”
Stellantis has announced production and job cuts in recent weeks, raising the ire of the United Auto Workers, which has threatened to strike over the delaying of a pledge to reopen a factory in Illinois.
Last week, Cox Automotive projected a 2.1 percent drop in third-quarter US sales in the wake of affordability challenges, with the benefit of lower Federal Reserve interest rates not yet flowing through to the car loan market.
But Cox has pointed to a possible bounce late in the year in an economy where growth has slowed but remains positive.
Chesbrough said some buyers are holding off due to the uncertainty of the presidential election. Another incentive to wait is further expected Federal Reserve interest rate cuts, which could arrive late in the year, he said.
jmb/dw
