The real volume – and profits – remain in trucks and crossover vehicles.
U.S. May sales came in at an exceptionally high SAAR (seasonally adjusted annualized rate) of 17.79 million light vehicles with light trucks and 0% interest rate Memorial Day promotions helping to beat analysts’ projections of 17.3 million. (Just beware of the service fees on these loans, it ain’t zero after the monthly processing charges are added.)
This is the highest SAAR since 20.65 million units in July 2005. Pickup sales increased 7.3% as a segment, and crossovers were up 10.4%. Sales of small cars were down 3.5%, according to AutoData. Enjoy it while it lasts. Of particular concern are longer-term loans approaching six years in duration.
“Car buyers continue to pay more for vehicles and mitigate that cost with longer loan terms and low interest rates,” said Jessica Caldwell, Director of Industry Analysis at Edmunds.com.
“Average new vehicle loan terms continue to inch up. The average new vehicle loan term was 67.9 months in May, the highest ever. The average new vehicle loan APR fell to 4.6% in May from 4.8% in April. With available longer loan terms, lower interest rates and abundant lease deals, people really are getting more car for the money,” said Caldwell.
Industry wide, 1.635 million light vehicles were sold last month, compared to 1,454,951 in April and 1,608,693 a year ago. So far this year, sales for all brands, unadjusted for business days, are up 4.5% from 2014.
Offshore brands again dominated the U.S. market in May at 54.6% of all sales for the month, up from 53.5% in April and even with the 54.6% share held in May 2014. Overall sales reflected May’s hot auto market as international brands sold 891,687 units, up from 775,510 last month and 879,503 last May.
The month’s sales winners from offshores included BMW, up 4.7%; Subaru, up 12.2%; and Volkswagen, up 8.1%. Audi, up 11%, saw sales rise for an industry-leading 67th month in a row. Honda’s sales were flat, falling 0.3%, and Toyota saw sales slip 1.6%.
In the closely contested Top Ten sales race six of the top ten selling vehicles represented international nameplate brands—up from five last month. The popular Toyota Camry remained a favorite with shoppers; it was the most popular car for the month, logging a third place finish behind the Ford F-150 and Chevrolet Silverado pickup trucks. Ram Pickup was fourth In fifth place; the Corolla also joined the Camry on the month’s list of top-sellers.
Honda vehicles made the strongest showing on the month’s top ten list, with three models. In sixth place, the compact Civic led the brand, followed by the midsize sedan Accord in eighth, and the crossover CR-V in ninth. The Nissan Altima finished the month in seventh place. Ford Fusion held tenth place just barely behind the Accord by fewer than 50 units.
The real volume remains in trucks and crossovers. Less expensive fuel prices, low interest rates, and a modest recovery in the U.S. economy have caused a resurgence in truck sales among the Detroit Three and Toyota after they plummeted in 2008 as the Great Recession took hold. Total Toyota light trucks rose 13.4% to 115,000, a May record
“Chevrolet has the hot hand in the pickup market thanks to our three-truck strategy,” said Kurt McNeil, General Motors’ U.S. vice president of Sales Operations. The Chevrolet Silverado’s estimated retail segment share was 27% in May, according to J.D. Power PIN data, up 3-percentage points year-over-year. Overall sales were 52,000. Calendar year to date, the truck’s retail segment share is 26%, up 1 percentage point.
Demand for the all-new Colorado midsize pickup is rising faster than GM’s ability to increase production, even with the addition of a third production shift in March. With 8,881 sales in May, the Colorado holds about one-quarter of the retail market for midsize pickups and it has been the industry’s fastest-selling pickup for four consecutive months. Its “days to turn” is only 13 days, according to PIN, and retail inventory is 11 days.
Demand is also strong for Chevrolet crossovers, which had their best sales ever in May. The Equinox (30,000) was up 30% compared to a year ago and the Traverse (10,000) rose 2%. Retail deliveries for the Equinox and Traverse were up 15% and 30%, respectively. The all-new Trax small crossover also continues to grow with 5,707 deliveries.
GMC, which focuses exclusively on trucks and crossovers, is far outpacing the industry. The brand had its best May since 2005, 51,000) up 12% y-o-y. The GMC Sierra was up 4%. Terrain had its best May sales ever, with sales up 11%, the Acadia had its best month ever, with sales up 67%, and the new Canyon contributed 2,901 units. Calendar year to date, GMC sales are up 15% (218,000) in a market that is up 4.5% (7,000,000).
In response to customer demand for Ford’s newest products, the company this year will produce close to 40,000 extra units by idling some North American plants for only one week during what has been the traditional two-week summer shutdown.
“Five of our assembly plants will build for an additional week in order to ensure we’re getting more of our vehicles into dealerships,” said Bruce Hettle, Ford vice president, North America Manufacturing.
Sales of the all-new Ford Edge established a May sales record, with sales up 34% (14,000) and turning in just 13 days on dealer lots. The 2016 Explorer went on sale in May, and retail sales increased 24% (20,000). Explorer is America’s best-selling mid-size utility with its best May retail sales results since 2004.
Ford continues to struggle with a frame shortage on its new F150 where America’s best-selling truck, had sales of 61,870 pickups – 10% y-o-y – on short supply. The second F-150 plant – Kansas City Assembly is not at full line speed. Inventory continues building as the plant comes fully on-line.
FCA US posted U.S. sales of 202,227 units, a 4% increase compared with sales in May 2014 (194,421 units), and the group’s best May sales since 2005.
The Chrysler, Jeep and Ram Truck brands recorded year-over-year sales gains in May compared with the same month a year ago. The Chrysler brand’s 32% increase was the largest sales gain of any FCA US brand during the month. The FCA group extended its streak of year-over-year sales gains to 62-consecutive months.
“Our Jeep brand continues to set records with its best monthly sales ever in May, helping us to achieve our 62nd-consecutive month of year-over-year sales increases,” said Reid Bigland, Head of U.S. Sales. “Despite one less industry selling day this May versus a year ago, we posted a 4% sales gain and exceeded the 200,000-unit threshold for the first time since March 2007.”
Opinions by automakers as to the 2015 full-year results vary, but hover around 17 million units. As noted above. Enjoy it while it lasts.
