Car sales in US plummet again
DETROIT: Passenger car sales plummeted again in March, dragging US auto sales to their third straight monthly decline, a strong indication that years of sales growth have come to an end.
Sales for the month fell 1.6 percent to just over 1.55 million vehicles, surprising analysts who expected a small increase.
For now, anyway, the auto industry is not worried. It is making solid money selling sport utility vehicles (SUVs) and trucks to consumers who are loading up on expensive features. But some analysts see large inventories of cars as a looming problem. Car sales were down almost 11 percent, while truck and SUV sales rose 5.2 percent, according to Autodata Corp.
Hyundai suffered the biggest decline at 8 percent, followed by Ford at 7.5 percent, as popular car models such as the Sonata and Fusion suffered big decreases. Fiat Chrysler sales tumbled 5 percent, Toyota fell 2 percent and Honda just under 1 percent. But Nissan sales rose over 3 percent, Volkswagen gained just under 3 percent and GM posted an increase of just under 2 percent, all helped by SUV sales.
Drawing in buyers required a lot of cash, low-interest loans and other incentives, however. Dealer stocks are growing because cars and trucks are not moving off the lots as fast as they did in the past.
Dealers concede inventories are on the rise, but Mark Scarpelli, the owner of Chevrolet, Kia and Fiat Chrysler dealers north of Chicago, said he considers it a normal part of the business cycle.
In the Midwest, Scarpelli said, dealers build inventory during coldweather months in preparation for spring and summer selling seasons. “There might be some higher inventory levels on certain car lines or truck lines, but that is going to happen in good times or bad,” said Scarpelli, who also is chairman of the National Automobile Dealers Association (NADA).
Automakers also are raising incentives a bit to keep sales moving, he said.
Investors were not so sanguine. A sell-off in auto stocks sent GM down 3.4 percent, Fiat Chrysler down 4.8 percent and Ford lower by 1.7 percent. And Ford is no longer the second most valuable US auto company. That distinction belongs to Tesla Inc., which rose 7.3 percent and now has a market value of $48.63 billion, compared with Ford’s $45.47 billion. GM is valued at $51.19 billion.
Tesla CEO Elon Musk responded on Twitter to critics who said his money-losing company is overvalued. He acknowledged the valuation is too high based on Tesla’s past, but added, “that is irrelevant. A stock price represents riskadjusted future cash flows.”