Volkswagen (PC) (USOTC:VLKAY)
Historical Stock Chart
1 Year : From Jul 2018 to Jul 2019
By Adrienne Roberts
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 2, 2018).
U.S. auto sales slowed in July as rising interest rates, higher gasoline prices and falling demand for passenger cars dented the industry's momentum after a strong first half of the year.
Overall U.S. auto sales dropped by 3.7%, according to analysts, due in part to one fewer selling day in July compared with the same month last year. However, sales dropped even as the economy remained strong and consumers continued to benefit from a tax cut adopted earlier in the year.
Buyers continued to flock to higher-priced sport-utility vehicles and pickup trucks despite fuel prices creeping higher, underscoring what some auto-industry executives say is a permanent shift in demand away from traditional passenger cars.
Analysts predict July could be a turning point for U.S. auto-industry sales, which had been tracking at a near-record pace for the first six months but are expected to cool in the second half.
"July will be one of the slowest months of this year," said Mike Jackson, CEO of the U.S.'s largest dealership chain AutoNation Inc., in an interview. But he also expects the remainder of the year to be challenging with auto makers struggling to keep sales growing consistently.
The pullback in demand comes as auto-industry profits already are under pressure from tariff-related rises in metals costs. Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV last week lowered their financial outlooks for 2018, citing the impact of U.S. tariffs on steel and aluminum on earnings.
Industry executives also have warned that President Trump's threats to impose tariffs on vehicle imports could cost auto makers billions of dollars and raise some car prices by nearly $6,000 per vehicle.
Ford, Toyota Motor Corp. and Honda Motor Co. reported percentage sales declines in the single digits. Nissan Motor Co. reported a 15% sales drop in July.
GM no longer reports monthly sales figures and has moved to reporting on a quarterly basis.
Fiat Chrysler was one of the few to report an increase in July, saying U.S. sales rose 6% due to strong demand for its Jeep brand vehicles. Volkswagen AG reported a 13% gain in U.S. sales.
Sales of passenger cars took a major hit in July with Toyota, Honda and Nissan reporting steep declines for their sedan sales. Toyota lowered discounts for its redesigned Camry sedan and sales fell 22% last month.
Ford's car sales were down 27% in July, as the U.S. auto maker moves to phase out several passenger car models, including the Ford Fusion sedan, and shift more investment to higher-profit trucks and SUVs.
"We continue to de-emphasize sedans," said Mark LaNeve, Ford's U.S. sales chief.
Billy Hayes, Nissan's vice president of regional operations, described July as a "challenging month" but said the Japanese car maker remains bullish on sedans.
"It's still a huge segment," Mr. Hayes said. "We're not taking our foot off the gas."
Auto makers also backed away from offering zero-percent finance deals in July, even though those incentives tend to be popular in the summer months to spur sales of older model-year vehicles. Those deals made up 6.9% of sales in July, the lowest share since 2005, according to Edmunds.com.
Buyers also saw fewer discounts on dealer lots for new cars, especially on sedans, said Thomas King, an analyst at J.D. Power. The average discount offered per vehicle was $3,665 in July, down from $3,869 in the same month last year.
Mr. King said he expects used cars will continue to become a more attractive option for budget-sensitive customers, especially with prices coming down as supplies of preowned vehicles rise.
"It's a great alternative to a new car and customers are taking advantage of the increased supply," Mr. King said.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com
(END) Dow Jones Newswires
August 02, 2018 02:47 ET (06:47 GMT)
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