Ford rebounds again; Toyota, Honda, Hyundai, Kia slump drags on

Ford Motor Co.'s U.S. sales rebounded sharply in July for the second straight month while the slump at Toyota Motor Corp. and Honda Motor Co. reached a year and deliveries at Hyundai and Kia fell for the fifth-straight month, as microchip shortages and stretched supply lines continue to undercut light-vehicle output and shipments.

The broader U.S. market fell 12 percent last month, LMC Automotive said Wednesday, within the range of forecasts for a 9.2 to 13 percent decline, based on estimates from LMC Automotive, J.D. Power, Cox Automotive and TrueCar.

July marked the 12th consecutive month that volume has dropped year over year.

Retail sales remained under 1 million units for the third consecutive month in July, LMC said. The seasonally adjusted annualized rate of sales in July came in at 13.5 million, Motor Intelligence said, down sharply from 14.81 million in July 2021 and slightly higher than June's 13.22 million rate.

Morgan Stanley estimated the retail SAAR in July at 11.8 mliion, down from 12.7 million a year earlier.

The SAAR has managed to top 15 million only once — 15.23 million in January — since June 2021.

"The U.S. auto industry continues to feature mixed and conflicting signals on the cycle," Morgan Stanley analyst Adam Jonas said. "Inflation appears to be impacting demand with low-income consumers, while a lack of supply is keeping price and mix extraordinarily strong."

LMC, citing a sales pace that is holding around 13.7 million units though July, reduced its 2022 U.S. light-vehicle outlook again, to 14 million, from 14.3 million just last month. The latest cut "reflects the intersection of continued supply constraints and demand that is expected to weaken as inflation and rising interest rates take hold," LMC said, adding "uncertainty is elevated through the end of the year and into 2023."

Following a 32 percent gain in June, Ford Motor's July U.S. sales jumped 37 percent, with Ford division deliveries rising 36 percent and Lincoln advancing 65 percent.

The automaker's combined crossover and utility vehicle sales, driven by newer models such as the Mustang Mach-E, Bronco and Bronco Sport, surged 70 percent, while pickup truck volume rose 20 percent. Ford said over 50 percent of its retail sales in July came from previously placed orders.

Ford, in another sign supply bottlenecks are easing, said it reopened retail orders on Tuesday for the Bronco Sport, Edge, Explorer and Ranger, after restarting retail orders for the F-150 and Transit a few weeks ago.

Sales dropped 21 percent at Toyota Motor last month, with deliveries down 21 percent at Toyota and 23 percent at Lexus. It was the 12th consecutive monthly decline for the Toyota division and Lexus’ sixth straight decline.  

General Motors, which reports U.S. sales results quarterly, lost more than 20,000 units in July, and was outsold by Toyota for the first time since January, LMC said.

Several of the Toyota brand’s top-sellers posted double-digit declines last month: Corolla, off 29 percent; Camry, down 24 percent; Highlander, off 49 percent. Sales of the RAV4, the nation's top-selling compact crossover, dropped 8.3 percent to 37,749. But Toyota's two pickups bucked the brand's overall results, with Tacoma deliveries up 1.4 percent to 23,917 and Tundra volume surging 66 percent to 10,694.

Toyota said it ended July with 104,790 vehicles in stock — 14,258 at dealers and 90,532 in port or transit — or a 16-day supply.

Volume skidded 47 percent at Honda Motor, with Acura off 59 percent and the Honda division down 46 percent. The Honda brand's biggest sellers continued to post sharply lower sales last month: Accord, off 56 percent; Civic, down 67 percent; CR-V, down 31 percent; HR-V, off 69 percent and Pilot, down 27 percent.

American Honda said the Honda and Acura brands continue to see "unprecedented high turn rates," reflecting "strong retail demand" despite supply chain and logistics constraints. The redesigned 2023 HR-V subcompact crossover posted July sales of over 4,000, "with everything left in the pipeline already pre-sold to customers," Honda said.

Sales dropped 12 percent at Hyundai and 11 percent at Kia last month, mostly on weaker car volume. Only four Hyundai models — Accent, Santa Cruz, Tucson and Veloster — posted higher deliveries last month. At Kia, only two vehicles, the Sorento and Sportage crossovers, generated gains.

In one bright spot, combined sales of electric vehicles, hybrids and plug-in hybrids rose 12 percent at Hyundai and 86 percent at Kia, the companies reported Tuesday, though volumes remain low.

Hyundai said it ended July with 14,784 light vehicles in U.S. inventory, down slighty from 17,922 at the close of June but off sharply from 46,113 at the end of July 2021.

After a slight gain in June volume that ended 12 consecutive monthly declines, Subaru returned to the minus column with a 17 percent drop in July deleiveries. Only three models posted gains last month:  Crosstrek, Impreza and WRX/STI.

July volume skidded 29 percent to 23,393 at Mazda and the company said it closed July with just 6,868 vehicles on hand, or a 6-day supply.

Among other luxury brands, Volvo reported a 41 percent drop in July volume, its biggest decrease in a stretch of 11 straight monthly declines. U.S. deliveries rose for the 20th consecutive month year over year at Genesis on July volume of 5,203, up slightly from 5,180 a year earlier.

The rest of the auto industry reports U.S. sales on a quarerly basis.

July was on track to be the ninth consecutive month that U.S. retail inventories closed below 900,000 vehicles, LMC and J.D. Power said. Kia, Toyota, Subaru, Honda, Lexus, Porsche, Hyundai, Land Rover, BMW and Acura had the lowest stockpiles at the start of July, Cox Automotive said, while Ram, Volvo, Jeep, Lincoln and Audi had the highest inventory levels.

Morgan Stanley on Wednesday estimated the industry finished July with a 24-day supply of vehicles, down from 26 days at the end of last month and 22 days in July 2021.

GM finished July with an estimated 39-day supply of vehicles vs. 22 days a year ago, while Stellantis closed July with a 45-day supply vs. 35 days a year earlier, and Ford's days supply was estimated at 40 days as July ended, compared to 36 days last year.

Japanese and Korean automakers, with more exposure to supply chains in China, where COVID-19 restrictions have been largely lifted but are still reverberating, will struggle to rebuild inventory well into the second half of the year, analysts say.

"There are plenty of headwinds pushing against a notable recovery in sales volumes," Cox Automotive Senior Economist Charlie Chesbrough said. "Rising interest rates and low consumer sentiment are keeping many potential buyers out of the market. At the same time, higher prices for both gasoline and vehicles are making affordability an even greater challenge. Tight supply, however, continues to be the biggest obstacle over the near term, and there is little evidence of supply returning to normal."

The average incentive per new vehicle was tracking at $894 in July, a decrease of 55 percent from July 2021, J.D. Power said. July marked the third consecutive month average incentives fell under $1,000 and the first time ever that they landed under $900. TrueCar estimates July incentives dropped 54 percent to $1,162 compared with July 2021 but rose 4.7 percent when compared with June.

Incentive spending per vehicle as a percentage of the average vehicle sticker price was pacing toward a record low of 1.9 percent, down 2.7 percentage points from July 2021 and the first time below 2 percent, J.D. Power and LMC said.

Fewer and lower discounts on leased vehicles is driving the decline in overall discounts, J.D. Power and LMC said, noting that leasing will account for just 17 percent of retail sales in July, down from 29 percent of all new-vehicle retail volume in July 2019.

• There were 26 selling days last month vs. 27 in July 2021.
• The average new-vehicle retail transaction price in July was expected to reach $45,869, J.D. Power and LMC Automotive said. The previous high for any month — $45,988 — was set in June.
• The average monthly finance payment in July was on pace to hit a record high of $708, up $81 from July 2021, reflecting higher prices and interest rates, J.D. Power and LMC said. Monthly payments have jumped 13 percent from a year earlier, higher than the 12 percent increase in average transaction prices year over year. July also marked the first month since December 2019 that the percentage growth in monthly payments exceeded the percentage growth in transaction prices.
• The average interest rate on new vehicles was 5.5 percent in July, compared with 5.3 percent in June, TrueCar said, and the average loan term on a new vehicle in July was about 71 months.