Truck sales on pace for 10 million mark

How far has the U.S. market tilted toward pickups, SUVs and crossovers?

Automakers are on pace to sell more than 10 million light trucks in a single calendar year for the first time.

Meanwhile, car sales are on pace to fall below 7 million this year for the first time since 2011 and only the fourth time since 1962.

So while it's increasingly unlikely that 2016 will beat last year's record for total light-vehicle volume, sales of the big vehicles that generate the bulk of many automakers' profits are at an all-time high. From that perspective, with gasoline prices expected to remain low and SUV sales still rising, 2017 could be even better for the bottom line.

"I think it looks a lot like '16 with more movement towards trucks," AutoNation CEO Mike Jackson said on the group's third-quarter earnings call. "The only restriction has been installed productive capacity. ... And that is certainly good for the industry overall to have. It's more profitable for the manufacturers on the truck side than on the car side."

Through October, overall new-vehicle sales were 0.3 percent short of last year's record-setting pace. But light-truck sales were 7.1 percent higher than in the first 10 months of 2015. At that rate, trucks would account for 10.6 million units out of 17.4 million units. (Industry sales totaled 17.47 million units in 2015.)

Light-truck sales have more than doubled since 2009, when 4.7 million were sold.

Car sales, on the other hand, fell 9.7 percent through October. All nine car segments tracked by the Automotive News Data Center were down in the first 10 months of 2016.

October was the industry's third monthly decline in a row, though the seasonally adjusted, annualized selling rate climbed to its highest level of 2016, 17.98 million, because the month had two fewer selling days than a year earlier.

"The industry is not quite as strong as it was last year, but we're going up against some really tough year-over-year comparisons," said Erich Merkle, Ford Motor Co.'s chief U.S. sales analyst. "So we expect that the industry will be down a little bit compared to record sales numbers we were achieving in the second half of last year particularly."

The disparity between trucks and cars widened in October, with trucks accounting for 63 percent of total volume, up from 59 percent a year ago.

A comparison of several corresponding segments highlights how dramatically consumer demand has moved toward bigger, higher-margin vehicles:

• Sales of midsize cars fell 21 percent, but midsize crossovers rose 4.2 percent. 
• Large cars fell 29 percent, but large SUVs surged 29 percent. 
• Compact luxury cars dropped 20 percent, but compact premium crossovers jumped 42 percent.

General Motors has reaped huge rewards from the market's shift, more than doubling its third-quarter net income and posting the smallest year-over-year decline among full-line automakers in October. GM is cashing in on its lineup of large SUVs, gaining 10 points of share in that segment vs. a year ago, even if total sales don't quite break a record this year.

"Key fundamentals like job security, rising personal incomes, low fuel prices and low interest rates continue to provide the environment for a very healthy U.S. auto industry," Mustafa Mohatarem, GM's chief economist, said in a statement last week. "The U.S. auto industry is well positioned for sales to continue at or near record levels for the foreseeable future."

Ford, another big truck seller, also is headed toward one of its largest-ever annual profits, though recall costs and the launch of its redesigned Super Duty pickups took big bites out of third-quarter earnings. Fiat Chrysler, whose U.S. sales this year are 85 percent light trucks, has raised its 2016 operating profit forecast twice this year.

Nissan North America, whose parent reports earnings this week, also is taking advantage. Its U.S. car sales were down 1.8 percent through October, while its light trucks were up 13 percent. After a 2.2 percent decline in October -- compared with a 5.9 percent drop for the industry -- Nissan's U.S. share for 2016 is 9 percent, a record for the automaker.

"Our strategy has been this is the year of the truck for us, as we drive growth with new launches," said Judy Wheeler, Nissan's vice president of U.S. sales. "We have new or freshened Armada, Pathfinder and Murano. We had five models up by [at least] double digits, and that was part of the success we had in holding our own in the market."

Lindsay Chappell contributed to this report.