New vehicle sales are feeling the pressure from a combination of rising interest rates and higher fuel prices as Ford, Toyota, Nissan and Honda all reported declining sales for April.
Only Fiat Chrysler and Volkswagen appeared to go against the prevailing trend in April, which was also the first month without a sales report from General Motors. The consensus was that GM sales dropped during April.
FCA reported a 5% increase compared with sales in April 2017. Overall sales were pushed by the Jeep brand which reported record sales for April. Sales of the Ram brand dropped by 9%.
Volkswagen of America Inc. reported an increase of 4.5% over April 2017. With 112,746 units delivered year-to-date in 2018, the company is reporting an 8.6% increase in year-over-year sales.
(Carmakers likely to report April sales declines. Click Here for the story.)
“We are encouraged with the brand’s continued growth in the market, driven by the success of our two new SUVs,” said Derrick Hatami, executive vice president of Sales and Marketing for Volkswagen of America. “We are also excited to have the all-new 2019 Jetta going on sale later this month, adding to the positive momentum.”
Ford said its sales dropped 4.7% during April.
“The industry continues to operate at historically strong levels. We are seeing this with our F-Series trucks, which have now posted 12 consecutive months of year -over-year gains. The market continues to strongly favor well-equipped SUVs and trucks and our F-Series and new Expedition and Lincoln Navigator are capitalizing on this generational shift,” said Mark LaNeve, Ford vice president for sales, service and marketing.
But Ford’s supply of unsold vehicles is creeping up with the company reporting that it now has a 99-day supply of unsold passenger cars on hand and supplies of SUVs and Trucks are in the 80-plus day range.
Toyota Motor North America reported a 4.7% decrease from April 2017 on a volume basis. Toyota division posted April sales of 170,706 units, down 5.1%, while the Lexus division reported April sales of 21,642 vehicles, down 2.1% on a volume basis and up 6% on a DSR basis.
Honda reported a 9.2 % sales decrease.
(Click Here for details about Ford’s Q1 profits.)
“Even as we increase our sales of light trucks to record levels, we remain committed to delivering a balanced lineup of cars and light-truck offerings for our customers,” said Henio Arcangeli Jr., senior vice president of the Automobile Division & general manager of Honda sales.
“Our flexible manufacturing capabilities allow us to evolve our production mix in real-time to meet these continued shifts in consumer demand. Moreover, we recognize not all customers in the market want a truck or SUV, so growth opportunities still exist within the passenger car side of our business,” he said.
Nissan Group also a decrease of 28% compared to the previous year. However, Nissan Leaf all-electric vehicle sales increased 10% to 1,171 units, however, several key models, including Rogue, Armada and Frontier all suffered double-digit slides.
Edmunds, the car buying service, noted In April, interest rates on new vehicle loans remained at elevated levels not seen since before the 2009 recession. According to the analysts at Edmunds, the annual percentage rate on new financed vehicles averaged 5.6% in April, marking the third straight month rates soared above 5%. This compares to an average APR of 5% in April 2017 and 4.2% in April 2013.
“With more potential Fed rate hikes ahead, we don’t expect to see these higher vehicle ownership costs retracting unless automakers are willing to dig much deeper into their pockets,” said Jessica Caldwell, executive director of industry analysis for Edmunds.
“Considering the fact that rates were in this territory 10 years ago, this isn’t an extraordinary phenomenon, but it is going to take a readjustment in the minds of consumers. Car shoppers should brace themselves because this is likely a new normal.”
“Average transaction prices moved up another 2% in April, with most manufacturers reporting year-over-year increases,” said Tim Fleming, analyst for Kelley Blue Book.
(To see more about FCA’s record Q1 profits, Click Here.)
“Although fuel prices rose for the second month in a row and are nearing a $3 national average, Kelley Blue Book saw greater price increases for SUV models than with cars. Luxury SUVs performed particularly well, as less price-sensitive luxury buyers splurged for the latest models, such as the Lincoln Navigator, Volvo XC60 and Infiniti QX50,” Fleming said.
