Toyota, Lexus pass rivals; rising incentives stoke concern

July's gist: Gains for (almost) everyone

Toyota, Lexus pass rivals; rising incentives stoke concern

In July, big pickup sales rose 5 percent in an overall U.S. market almost twice as hot and that expanded by 9 percent. For the year, combined sales of the six models in the full-sized pickup segment are 4 percent higher, while overall light-vehicle volume is up 5 percent.

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U.S. auto sales rose 9 percent in July to 1.4 million units, a fifth strong month to ease the memory of harsh winter storms that blunted January and February volume.

On the day that shareholders approved the merger that formally creates Fiat Chrysler Automobiles, Chrysler Group posted a 20 percent U.S. sales gain to lead all major players.

Toyota Motor Sales followed with a 12 percent increase, Nissan North America rose 11 percent and Ford Motor was up 10 percent. General Motors matched the market’s 9 percent growth.

Below that, Hyundai-Kia boosted sales 4 percent, but American Honda fell 4 percent. Volkswagen Group was off 6 percent overall, dragged down by a 15 percent loss for the VW brand.

Jeep volume jumped 44 percent, while Chrysler Group’s red-hot brand outpaced single-digit gains for Fiat and Dodge.

But Toyota was hot across the board, enough to narrowly outsell Ford Motor for the month. Lexus posted a 19 percent increase, enough to outsell both BMW and Mercedes-Benz in July, although it still trails both in the U.S. luxury brand race so far this year. Toyota/Scion gained 11 percent for the month, led by a 37 percent jump in RAV4 volume.

“The small crossover segment remains hot,” Toyota Division general manager Bill Fay said during a conference call. “We could have sold more RAV4s if we had them.”

The industry’s July seasonally adjusted annual selling rate was 16.5 million, using new guidelines released today by the U.S. Bureau of Economic Analysis. That’s down from restated SAARs of 16.9 million in June and 16.7 million in May. But it’s the fifth straight SAAR of at least 16 million and more than a million higher than the storm-limited SAARs of January and February.

Anticipating continued strong sales in July, three forecasters adjusted full-year outlooks upward in recent days. TrueCar.com raised its 2014 forecast a quarter million higher to 16.35 million. LMC and J.D. Power and Associates moved up a notch to 16.3 million. Similarly, Cars.com moved up 100,000 to 16.2 million.

But Larry Dominique, executive vice president of TrueCar.com, said July industry incentives rose 7.1 percent from a year earlier to an average $2,731 per vehicle.

“Sales are strong, but incentives are a bit of a concern overall,” he said in an interview. “Are we going to fall back into bad behavior?”

Dominique sees natural demand at a 16.2-16.3 million selling rate the last five months of the year, unless automakers drive it higher with excessive incentives that could reduce margins and hurt profits.

In other news:

Pickups lumber along

Last year’s stars, full-sized pickups, so far this year have positive sales but only match the market. July sales rose 5 percent in a market almost twice as hot. For the year, sales of the six models in the segment are 4 percent higher.

In July, segment leader Ford F-series gained 5 percent, GM’s Chevrolet Silverado and GMC Sierra duo rose 2 percent, the Toyota Tundra also gained 5 percent and the Nissan Titan lost 8 percent. The bright spot? Chrysler Ram pickup jumped 14 percent in July. Ram is also the big year-to-date winner -- 19 percent higher.

After seven months, automakers have sold 47,924 more big pickups than a year earlier.

Chrysler grabbed the lion’s share of the growth: 79 percent. Toyota got another 15 percent, GM 10 percent and Ford 2 percent. That adds to more than 100 percent because Nissan Titan sales are off by 2,532 units.

Toyota tops Ford

Toyota Motor Sales outsold Ford Motor in July -- 215,802 to 211,467 -- although Ford keeps the No. 2 U.S. sales spot year to date.

Through seven months, Ford and Lincoln sales total 1,476,824 while Toyota/Scion and Lexus trail by 95,415 units. But Toyota has almost cut Ford’s lead in half from a year ago. This time last year, Ford led by more than 180,000 units.

Cars vs. trucks, revisited

Light trucks outsold cars in July, 746,132 to 689,673. Edmunds.com notes this is the 11th straight month of this, the longest stretch since the SUV hey day, 2003 to 2005. The key is growth in the compact crossover segment, analyst Jessica Caldwell says.

She’s right (compact crossover sales rose 20 percent in July). But classifications obscure the view. The first car-based minivans got called light trucks so automakers had easier fuel-economy standards to meet.

Decades later, minivans are still in the “truck” camp. So are car-based crossovers and lately even some car-style unibody SUVs.

Exactly which vehicles are cars and which trucks? If you sort by unibody versus body-on-frame platforms, “cars” outnumber “trucks” by a landslide. But use the squint test, the current classification of “sit-high” trucks and “sit-low” cars puts trucks slightly ahead.

What’s your preference? (And if you pick platform over squint, we have 40 years of data you can update).

You can reach Jesse Snyder at jsnyder@crain.com.


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