March car sales underwhelm
The U. S. auto industry turned in an underwhelming performance in March as sales disappointed despite rising discounts.
The industry reported sales of 1.56 million vehicles for the month, down 1.6% from a year earlier, according to Autodata. Inventories of unsold vehicles, especially of small cars, increased. Sales analysts for Edmunds. com, Kelley Blue Book and TrueCar subsidiary ALG all had expected amodest upturn.
In the face of declining sales, now it’s up to automakers to see if they can pare production of slow- selling models and reduce the profit- crushing practice of having to offer heavy discounts to clear the backlog. Sales incentives rose 13.4% in March compared to a year earlier to an average $ 3,511 per vehicle, according to ALG.
“Going forward we’ll see automakers likely cut production to manage inventories and to not go out of control with incentives,” Autotrader analystMichelle Krebs said.
Overall, General Motors, the largest seller of U. S. vehicles, recorded a 1.5% sales increase but missed expectations of a much larger uptick. The company’s inventory level rose to a 98- day supply, up from 71 days a year earlier and symbolizing the industry’s challenges.
Ford Motor’s sales slumped 7.2%, though most of the decline was attributable to lower sales to corporate and rental fleets. In 2016, those sales were disproportionately clustered toward the beginning of the year.
Fiat Chrysler, aiming to reduce its fleet sales because they are typically less profitable than those to individual customers, posted a 4.6% sales decline.
Tesla was an exception; its first- quarter deliveries increased 69% from a year earlier. The electric- carmaker produced 25,418 vehicles in the first quarter and delivered “just over 25,000” globally, the company said in a statement. Tesla does not provide monthly sales results, reporting delivery figures only quarterly. The company’s stock closed up 7.3% at $ 298.52.
As automakers continue to pile on discounts to find customers for unsold new vehicles, profitability may contract. The average new vehicle sold for $ 34,342, up 1.7% over the same month last year, Kelley Blue Book said.
Still, production is outpacing sales, meaning some dealers have too many vehicles. Inventories hit 4.1 million units entering the month, the most since June 2004, according to an Edmunds analysis based onWard’s Auto figures.