Slacking Demand for Traditional Cars Hurts Auto Makers
May 01 2018 - 10:38AM
Dow Jones News
By Adrienne Roberts and Mike Colias
Detroit auto makers on Tuesday reported mixed U.S. auto sales
for April as demand for conventional passenger cars, such as
sedans, continues to wither.
After an unexpectedly strong March, vehicle sales are expected
to show a drop in April when more auto makers report later Tuesday,
partly because of two fewer selling days than last year. But
analysts say April results also will reflect a number of factors
keeping sales from their highs of recent years, including higher
monthly payments and a proliferation of late-model used cars for
buyers to choose from.
Ford Motor Co. reported a 4.5% decrease, selling 203,856
vehicles during the month. The company's passenger-cars sales fell
15% for the month, while truck sales remained strong.
Fiat Chrysler Automobiles NV reported a sales increase, due to
strong sales of the company's Jeep brand vehicles. It said sales
were up 5% in April, rising to 184,149.
General Motors Co. won't report April sales. It reported its
last monthly sales figures for March, and will disclose sales on a
quarterly basis moving forward.
Demand for pickup trucks and SUVs has fueled the boom in overall
U.S. auto sales in recent years. But dealers and car executives
point to signs of stiffening competition in those categories, which
could sap profits.
Auto makers spent about $3,700 per vehicle in discounts and
other incentives in April, about 5% higher than a year earlier,
according to research firm LMC Automotive. But the deals were
heavily tilted toward crossovers and SUVs, while incentives on car
models declined.
It is a sign the price pressure that has hurt profitability in
car categories in recent years could be spreading to more-lucrative
segments like crossover SUVs.
Fuel prices also are creeping higher. Average regular retail gas
prices reached $2.80 last week, according to the U.S. Energy
Information Administration, the highest since 2015. Prices are
expected to rise and could top $3.00 through the summer driving
season.
Climbing gas prices comes at a time when the majority of
Americans prefer gas-guzzling sport-utility vehicles and pickup
trucks. Higher gas prices combined with rising interest rates could
make it harder for dealers to arrange monthly payments that buyers
can afford.
Mike Jackson, CEO of AutoNation Inc., the biggest dealership
chain, on Tuesday said despite rising gas prices, he doesn't see
consumer behavior changing. He said the fuel economy of SUVs "has
improved dramatically" and he doesn't see consumer preference
switching back to sedans unless gas prices hit $5.00 a gallon.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com and Mike
Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
May 01, 2018 10:23 ET (14:23 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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