TM Toyota Motor Corporation

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 (April 3, 2019).

Major auto makers on Tuesday posted declines in U.S. sales for the first quarter, adding pressure on car companies already grappling with weaker conditions in important markets globally.

Analysts expect the industry to report an overall decline of around 5% in sales for March, historically one of the biggest months for car sales as the unofficial start to the spring selling season. First-quarter sales are expected to decline 3% to 4% compared with a year earlier, according to analyst estimates.

Several factors are contributing to the slowdown. A record run of car sales eased pent-up demand in the years following the 2007-09 recession, analysts say. Vehicle prices also have risen sharply, which, along with an uptick in interest rates, have put new wheels out of reach for some buyers.

There also are more attractive used-car options as a record number of lightly used cars return from lease service, nudging more buyers toward the preowned lot, analysts say.

"We can confidently say new-vehicle sales are past their peak," said Jeremy Acevedo, an analyst at car-shopping site Edmunds.com. "The question now is what the new normal will be."

The first-quarter decline makes it likely that full-year U.S. sales will fall below 17 million vehicles for the first time since 2014, analysts say.

General Motors Co. , the largest U.S. auto maker by sales, said Tuesday sales through the first three months of the year dropped 7%. Fiat Chrysler Automobiles NV said sales dropped 3% in the first quarter.

Toyota Motor Corp. and Nissan Motor Co. both said sales declined in the quarter. Honda Motor Co. was the only major auto maker to report a sales increase.

Ford Motor Co. said it would report March sales on Thursday.

"There's an uneasy feeling," said Ernie Boch Jr., a car dealer with brands such as Toyota, Chevrolet and Nissan near Boston. He said while sport-utility vehicles and pickup trucks are selling well and bringing in strong profits, sedan sales are struggling.

Several auto makers said solid economic indicators like employment and wage growth should help car sales for the remainder of the year following a slow start.

Jack Hollis, general manager of Toyota North America, said relatively low gasoline prices, high consumer confidence and fewer than expected interest rate increases should bolster new-vehicle demand.

"Obviously everything changes depending on if there are border closings, tariffs or anything having to do with trade," Mr. Hollis told reporters during a conference call. "Assuming those things don't come to fruition, I think we have a very strong year."

Despite the first-quarter decline, strong pricing in the U.S. remains a silver lining for the auto industry. Consumers continue to shell out more money for new vehicles, largely because of a rapid rotation from traditional sedans into larger, pricier vehicles like SUVs and pickup trucks, helping to bolster auto makers' bottom lines.

Detroit's auto makers have been rolling out more SUVs and pickup trucks to capitalize on the trend. For example, GM said buyers of its redesigned Chevrolet Silverado and GMC Sierra pickup trucks shelled out $8,000 more for the new trucks last quarter -- to around $48,000 -- compared with what they spent on the older versions a year earlier.

Industrywide, the average price paid by an individual buyer rose about 3% in the first quarter to $33,319, a record for the period, according to research firm J.D. Power.

While the pace of U.S. sales remains historically strong, the U.S. slowdown comes as auto demand weakens in China, the world's largest car market by sales. China vehicle sales fell last year for the first time in more than two decades and continued to decline in the first few months of this year.

BMW AG said last month that global economic and trade pressures, combined with the rising cost of investments in electric and self-driving cars, would lead to a significant drop in the auto maker's profit this year. Daimler AG, Ford and GM all have recently undertaken large cost-cutting programs as profit margins come under pressure.

Corrections & Amplifications Honda Motor Co.'s sales rose by 2% in the quarter. An earlier version of this article incorrectly said sales declined by 2%.

Write to Adrienne Roberts at Adrienne.Roberts@wsj.com

(END) Dow Jones Newswires

April 03, 2019 02:47 ET (06:47 GMT)

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