The ongoing boom in U.S. auto sales continued in February as 1.3 million light vehicles were sold, a 6.9% increase from the year before. AutoData reports that the seasonally adjusted annual rate (SAAR) in February was 17.54 million units, versus 16.4 million last February. Yes, a million plus more.
As has been the trend for years now, inexpensive gas, cheap money, and the revival of the economy that brought truck and SUV buyers back in droves are feeding the boom. Playing supporting roles here are the 12 banks of the Federal Reserve – whose members are lovers all of fat rat bankers and Wall Street, the very people who destroyed the economy under President Bush the younger, and demonstrably the less wiser. Nonetheless the Fed keeps the money printing presses running under President Obama almost as fast as auto assembly lines are now moving – if not faster.
Detroit Three brands at 627,000 vehicles wholesaled finished the Presidents’ Day month with a 46.6% share of the robust market, up from 46.2% last month. Overall, sales of the Detroit Three increased from February 2015 when 572,501 vehicles were wholesaled. Of the 627,000, light trucks accounted for 454,000 of the total. That right – 72%.
Gulp. I’ve seen this movie before – about once each decade since the 1970s with the same script and same unhappy ending.
The downside here is that offshore brands control the car market, a pattern that in the past when the truck / gas guzzler bubble burst severely hurt domestic brands and their unionized workers. Oh how quick we forget. If you analyze the Top Ten sellers – where the real volume and real profits are for automakers, only one domestic car made the list – the Ford Fusion (25,250) in tenth.
As always pickup trucks led the joyful way in Detroit. Ford F-150 (61,000), Chevrolet Silverado (43,000) and Ram (39,000) were 1-3 in sales respectively. Then came the usual list of high quality, high fuel economy, high residual values and extremely high customer satisfaction professionals: Toyota Camry (32,000), Toyota Corolla (29,000), Nissan Altima (28,000), Honda Civic (28,000), Honda Accord (26,000), Toyota Rav4 (25,500).
There is enough irony here to keep late night talk show hosts quipping for years – if it wasn’t for the indeterminable election chatter. Remember last century when the then arrogant, market-dominate Detroit Three argued that the ‘foreigners’ should be building in the U.S.?
The thinking – if you can call it that – was deeply flawed. Honda came to Marysville, Ohio first and built an empire. Toyota and Nissan, asleep when this happened and wary of gaijin, quickly woke up and followed in a carefully crafted strategy that saw plants and other investments in separate southern, non-union states. A deliberate by-product was serious political clout at the state and national levels.
This has now resulted in an interesting and highly ironic ‘Buy American’ twist. If you look at American made cars on a sales-weighted basis the Ford F-150 leads the list, according to Cars.com. However, Numbers 2-6 are respectively: Toyota Camry, Honda Odyssey, Toyota Sienna, Toyota Tundra, Toyota Avalon. Numbers 7-9 are: Chevrolet Corvette, Honda Ridgeline and Honda Crosstour. Number 10 is the low volume Dodge Viper. (Cars.com’s American-Made Index rates vehicles built and bought in the U.S. Factors include the percentage of parts considered domestic under federal regulations, whether the car is assembled in the U.S. and U.S. sales.)
So be careful, really careful what you wish for! Not first rate strategic thinking in our view. More like the old Detroit ‘Ten Day Sales’ mentality. The most delicious aspect here in AutoInformed’s view is that you now have Donald Trump, the presumptive Republican presidential nominee, threatening to impose a 35% tariff on Ford Motor Company for exporting jobs out of the U.S. and importing vehicles back in.
I’ll bet politics is Job One over in Dearborn these days for the government affairs and corporate P.R. staffs. You would never know this because Ford image makers and lobbyists are not going to say much in public other than these plans to shift car manufacturing to Mexico were in place before Trump held up the ‘map of Manhattan’ on his middle finger to the Republican establishment. Ford and FCA claim they are simply rebalancing production.
Good luck with that. Maybe Ford Motor should build where it sells? Delicious.
Moreover, according to AIADA (American International Automobile Dealers Association) offshore brands continue to increase their North American manufacturing presence, producing more and more of their vehicles where they sell them. Together, these makers produced 471,229 vehicles, up from 396,700 last month. Asian brands produced the majority —totaling 437,811 units. These included 42.5% of all cars sold in the U.S. and 25.2% of all trucks sold. European brands produced only 33,418 vehicles at their North American plants, including 3.3% of all cars sold in the U.S. and 1.9% of all trucks sold.
More of same in March, we predict – both in sales results and politics…
