Pickup Truck Sales Help Automakers Beat Expectations

December 1, 2016 10:06 AM
 
pickuptrucks

Ford Motor Co., General Motors Co., and most other major automakers beat analysts’ estimates for U.S. sales on demand for pickups and sport utility vehicles, boosted by holiday-season dealmaking. Fiat Chrysler Automobiles NV, with a rare stumble in Jeep sales, posted a decline that was bigger than predicted.

Ford shares rose the most in four years after the company reported a 5.1 percent sales increase that included the highest November deliveries for F-Series trucks since 2001, far exceeding the average estimate. GM’s light-vehicle sales gained 10 percent, aided by incentives topping $10,000 on some Silverado pickups and Suburban SUVs. Sales also topped forecasts at Toyota Motor Corp. and Nissan Motor Co.

Auto sales are running at near-record levels as the U.S. economy continues to expand with little inflation, according to a Federal Reserve survey. And relatively low gasoline prices, combined with aggressive promotions, are spurring sales of pickups and SUVs, which tend to be larger and less efficient than cars. So-called light trucks, which include minivans, may have outsold cars by 2-to-1 in November, according to Tim Fleming of Kelley Blue Book.

“All economic indicators show significantly improved optimism about the U.S. economy,” Mustafa Mohatarem, GM’s chief economist, said in a statement. “We believe the U.S. auto industry is well-positioned for sales to continue at or near record levels into 2017.”

Automakers and dealers drew from a grab bag of holiday-season tricks to sustain sales. GM dangled 20 percent discounts nationwide on its Chevrolet, GMC and Buick brands in November, and makers of luxury autos revived annual promotions such as “the Season of Audi” and Lexus’s “December to Remember.”

Total light-vehicle sales probably rose about 3.8 percent in November, according to the average estimate of analysts surveyed by Bloomberg. GM on Thursday predicted the month’s annual sales rate, adjusted for two extra selling days this November, would be about 17.9 million vehicles -- more than the 17.7 million average estimate. So far this year, the annual sales rate is running about 17.5 million, GM said, or about equal to 2015’s record total.

Ford’s shares rose as much as 6.9 percent to $12.78, the biggest intraday gain since October 2012. GM rose 5 percent to $36.27 at 10:24 a.m.

For most automakers, light-truck demand fueled sales:

  • Ford saw a 19 percent gain in SUV deliveries and an 11 percent increase in sales of F-Series pickups. Car sales plunged 9.7 percent, including an 18 percent drop for the Focus compact. Ford is moving production of that small car to Mexico from Michigan.
  • GM’s Cadillac Escalade sales jumped 25 percent and Chevrolet Tahoe deliveries surged by 31 percent.
  • Fiat Chrysler’s sales dropped 14 percent instead of the 9 percent analysts predicted. While Fiat Chrysler’s Jeep brand sales fell 12 percent, led by a 37 percent plunge in Cherokee deliveries, a bright spot was a 12 percent jump for Ram brand pickups and work vans.
  • Nissan’s Rogue compact crossover rose 18 percent and accounted for almost half of the brand’s light-truck sales in November.
  • Toyota also benefited from the SUV boom with Highlander sales soaring 67 percent. It did have a rare win on the car side with compact Corolla sales jumping 12 percent, topping both the midsize Camry and the RAV4 crossover for the month.
  • Honda Motor Co.’s 6.5 percent sales increase trailed the 8.4 percent average estimate.

Incentives that were introduced last month may ultimately help determine whether 2016 ends up as a record seventh straight year with an industrywide sales gain. Many of the automakers’ deals pegged to Black Friday actually ran all through November and some stick around the rest of the year.

GM’s full-size pickup incentives through Nov. 20 jumped 46 percent from a year earlier to $5,753, according to data from researcher J.D. Power obtained by Bloomberg, compared with Ford’s $4,467, a 5 percent increase, and Fiat Chrysler’s Ram at $6,062, up 19 percent.

“If this month’s forecast holds, December’s year-over-year sales only need to be flat to set a new annual record in 2016,” Jessica Caldwell, an analyst with Edmunds.com, wrote in an e-mailed statement.

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