April sales dip at Ford, GM and Fiat Chrysler amid industry slowdown

DETROIT US auto sales fell 7.2 per cent for Ford, 7 per cent for Fiat Chrysler, and 5.8 per cent for General Motors in April as a long-awaited industry-wide slowdown began to take hold.

After seven years of growth, US auto sales are beginning to fall in the face of slightly higher interest rates and higher overall transaction prices.

The industry’s pace of sales was slower than expected throughout the month, said Mark LaNeve, Ford’s vicepresident of sales and marketing. LaNeve said it was too early to predict sales numbers for the rest of the year.

“We have to let the year play out,” he said. “I am not discouraged by the numbers. I view it as within some kind of normal range in a plateauing industry.”

Mustafa Mohatarem, GM chief economist, said, “When you look at the broader economy, including a strong job market, rising wages, low inflation and low interest rates, and couple them to low fuel prices and strong consumer confidence, you have everything you need for auto sales to weather headwinds and remain at or near-historic highs.”

Sales fell 4.5 per cent for Toyota and 1.5 per cent for Nissan but increased 1.6 per cent for Volkswagen.

Industry experts are predicting that industry sales declined 3 per cent to 4 per cent in April and say 2017 will likely be the first year of industry sales declines in the US since 2009.

“Considering that we have had seven years of growth, industry sales had to come down at some point,” said Jessica Caldwell, executive director of industry analysis for car-shopping website Edmunds.com.

The industry decline could be good news for consumers as automakers ramp up incentives and fight harder for market share. In April, the average incentive for a new vehicle was above $3,000, or 15 per cent higher than last April.

“As we move into the summer moths, I think that consumers that are looking for a good deal are going to be able to find good choices,” Caldwell said.

That means automakers must now more carefully manage their inventory and not go overboard on incentives.

Many of the factors that have boosted industry growth for several years are now starting to dissipate. Interest rates are rising and used-car prices are declining as customers are turning in an increasing number of vehicles leased in recent years.

New vehicle interest rates were above 5 per cent for the second month in a row, which has not happened since the beginning of 2010, Caldwell said.