It looks like January may have been a decent month for U.S. auto sales.
With the help of crossovers and other light trucks, gains were posted nearly across the board for the companies that have decided not to abandon the industry’s long tradition of monthly sales reports.
They ranged from a 22 percent surge at Mitsubishi to a 0.5 percent advance at Subaru, sandwiched around a 6.3 percent advance from Toyota Motor Corp. The only company to record a decline: American Honda, with a 4.3 percent dip.
The way things are going, there may be more sales day no-shows. Jaguar Land Rover waited until today to disclose that it, too, would be joining a movement that was led by General Motors in 2018 and had snowballed its way through most of its rivals by last month. And Mercedes-Benz said it would not release January figures but fell short of saying it was all-in on quarterly reporting.
So the industry must wait until April Fool’s Day to get its first official read on how 2020 is progressing. This after an unprecedented five-year run of annual sales above the 17 million mark.
In the meantime, strong demand for crossovers and other light trucks also helped January U.S. sales rise 4.8 percent at Hyundai, 5.2 percent at Volvo, 8 percent at Kia and 18 percent at Mazda.
How they fared
Toyota said volume rose 5.5 percent at the Toyota division and 13 percent at Lexus, with overall light-truck sales rising 11 percent and car deliveries slipping 1.1 percent.
The company said four core nameplates -- the Toyota Prius Prime, RAV4 and Highlander, and the Lexus RX crossover -- set January sales records.
Hyundai said retail demand for crossovers rose 54 percent to 25,110 last month, offsetting lower car sales and a 68 percent drop in fleet deliveries. Overall, crossover sales totaled 25,861, up 23 percent and a January record, the company said.
Hyundai's crossover lineup has been expanded to six models with the addition of the large Palisade and subcompact Venue in the last year.
Retail demand for the Tucson, Hyundai's top-selling crossover in 2019, rose 61 percent, with overall volume for the model rising 8 percent in January.
Hyundai's gains came even as the brand's incentives dropped last month, according to TrueCar/ALG estimates. (See chart below.)
At American Honda, car sales dropped 11 percent while the company's light-truck deliveries rose 0.9 percent to a January record of 59,254. Volume fell 4.2 percent at the Honda brand, behind weaker Accord and Civic demand, and 5.5 percent at Acura.
Subaru, one of the hottest brands over the last decade, said it set a January sales record with 46,285 car and light-truck deliveries.
A growing crossover lineup also drove Mazda to an 18 percent gain last month. The company said combined sales of four crossovers -- the CX-3, CX-30, CX-5 and CX-9 -- increased 41 percent to 18,974, helping the brand's volume rise for the fourth straight month.
Among other brands, January volume rose 22 percent at Mitsubishi; 14 percent at Genesis, where deliveries have increased 12 straight months; and 5.2 percent at Volvo, which has now posted13 consecutive gains.
Overall, U.S. light-vehicle sales were expected to fall in January, hurt by lower retail demand, even as incentives rise, analysts said.
Yet the final tally for January will be an even bigger question mark since BMW Group, Nissan North America, and the Volkswagen Group’s VW, Audi and Porsche brands late last month joined the Detroit 3 in shifting from monthly U.S. sales releases to quarterly reports.
Incentives
J.D. Power and LMC said average industry incentives in January topped $4,000 per vehicle for the first time during the month, one of the slowest periods of the year for showroom traffic.
TrueCar/ALG estimates average incentives totaled $3,674 last month, a drop of 1.3 percent from January 2019 ($3,721) and 13 percent from December 2019 ($4,207). (See chart below.)
Amid slowing retail demand, automakers and dealers have been forced to dangle fatter discounts to keep inventories in check and clear out remaining 2019 models.
Some dealers offered $9,000 off on the all-new Jeep Gladiator pickup, CarsDirect reported last week. Ford dealers dangled up to $6,000 in rebates on remaining 2019 Edge and Escape models and Kia pitched discounts up to $4,000 on the Sedona and Optima, according to Cox Automotive data.
Some discontinued models, notably cars, have been marked down even more, with $6,000 discounts on the 2019 Buick Cascada, deals up to $8,250 on the 2019 Buick LaCrosse, and up to $15,000 off on the Jaguar XJ sedan, Cox data shows.
Overall, discounts were on track to average $4,136 last month, an increase of $258 over 2019, J.D. Power and LMC said.
“The larger concern remains the record level incentive spending supporting the underlying volume,” said Thomas King, head of J.D. Power’s data and analytics group.
SAAR outlook
The seasonally adjusted, annualized rate of sales for January is expected to come in at 16.5 million to 16.7 million, according to estimates from TrueCar/ALG, J.D. Power/LMC and Cox Automotive, in line with the January 2019 SAAR of 16.58 million but down from December’s 16.98 million rate.
2020 outlook
U.S. light-vehicle sales finished 2019 down 1.2 percent at 17.1 million, with higher fleet shipments offsetting weaker retail volume, according to the Automotive News Data Center. Most analysts see 2020 volume dropping to 16.4 million to 16.9 million on lower retail deliveries. Edmunds sees sales remaining flat in 2020.
S&P said affordability and heightened consumer interest in purchasing used vehicles will likely undermine U.S. light-vehicle demand this year, even as the risk of a recession drops to 25 percent to 30 percent from 30 percent to 35 percent.
“The U.S. auto industry remains under fiscal pressure due to various geopolitical risks and the downward trend of used-vehicle prices," S&P Global Ratings credit analyst Nishit Madlani said a report last month. "In addition, the recently reached trade agreement between the U.S. and China will only have a limited impact on the industry and the next round of [trade] negotiations will likely drag out over many years. In the meantime, the imposition of substantial tariffs on imports could hurt the auto market and lead to consumer price increases."
Odds, ends
- There were 25 selling days last month, the same as Jan. 2019.
- J.D. Power said average incentive spending on cars was on track to rise $328 to $3,952 per vehicle in January, while spending on pickups, crossovers, SUVs and other light trucks was on pace to increase $217 to $4,200.
- ALG estimates the average transaction price for a new vehicle rose by $688, or 2 percent, to $35,521 compared to January 2019.
- The annual percentage rate on new financed vehicles averaged 5.7 percent in January, compared to 5.4 percent in December and 6.2 percent in January 2019, Edmunds said. The share of new-vehicle sales financed at 0 percent dropped to 3.6 percent in January, the lowest level since April 2019.
- The average number of days a new vehicle sat on a dealer lot before being sold to a retail customer was 71 through Jan. 19, J.D. Power said, up one day from Jan. 2019.
- Fleet deliveries are expected to total 269,800 last month, a decline of 1.2 percent from January 2019, with overall fleet volume forecast to account for 24 percent of total light-vehicle sales, flat from a year ago, J.D. Power said.
