Editor's note: The U.S. Sales Report newsletter, published monthly by Automotive News since 2010, now will be sent quarterly, when most automakers release data. First-quarter results are expected on April 1.
Several automakers, led by Toyota, Honda and Hyundai, posted higher U.S. sales last month as consumers took advantage of rising incentives and President's Day deals. Across the board, light trucks, notably pickups, crossovers and SUVs, drove the gains.
The seasonally adjusted, annualized rate of sales for February came in at 17.04 million, Motor Intelligence said, near the top of the range of forecasts -- 16.5 million to 17.1 million -- from TrueCar/ALG, Cox Automotive and J.D. Power/LMC. The SAAR was 16.63 million in Feb. 2019 and 17.07 million in January.
Toyota Motor Corp., beyond record February sales of several key light trucks, said sales rose 12 percent to 194,152 last month. Volume rose 13 percent at the Toyota division and 5.1 percent at Lexus.
U.S. sales of the Toyota RAV4, Highlander, Tacoma and 4Runner set February records, helping the division's light-truck deliveries rise 20 percent to 109,394, also an all-time high for the month. The Toyota brand also received a boost from cars, which rose 3 percent to 63,619.
American Honda, paced by the CR-V and HR-V crossovers along with the Civic sedan, posted a 4.2 gain in U.S. sales in February, with deliveries of 120,006 during the month.
Sales rose 4.7 percent at the Honda division.
American Honda said truck sales improved 6 percent with Honda CR-V volume rising 7.5 percent to 28,288 and Honda HR-V deliveries surging 14 percent to 8,114. American Honda also posted a 2 percent gain in sedan sales, with Civic deliveries jumping 11 percent to 25,617. At Acura, volume rose 0.4 percent to 12,264.
Hyundai Motor America's expanded crossover lineup and stronger retail demand delivered another U.S. sales gain for the company in February, with volume rising 16 percent to 53,013, a record for the month.
Hyundai said February retail sales increased 26 percent, driven by a 57 percent jump in crossover volume, led by the Tucson, up 58 percent, Kona, up 16 percent, and the new Palisade, with retail sales of 6,953. The company's overall deliveries have increased 17 out of the last 19 months.
Fleet volume dropped 20 percent and represented 15 percent of sales last month, Hyundai said.
Kia said its U.S. sales for the month rose 20 percent to 52,177 vehicles. The increase was led by the Forte compact sedan, up 22 percent to 8,513, and a February record for the Sportage compact crossover, up 17 percent to 7,934.
The Telluride crossover generated sales of 6,754 in February and the new Seltos compact crossover tallied 2,798.
“We’ve increased Telluride production and sales of its newest sibling, the Seltos … have shattered our initial projections,” said Bill Peffer, vice president of sales operations for Kia Motors America.
Sales of the subcompact Rio shot up 69 percent to 3,082 while the midsize Optima sedan saw a 20 percent decline in volume to 5,760.
Subaru said it recorded its best February ever with U.S. sales rising 5.3 percent to 51,695. The Forester also set a February record, with volume jumping 25 percent to 16,458. Outback sales rose 2.7 percent to 12,665 while the Crosstrek was up 0.4 percent to 8,287. Legacy deliveries dropped 9.3 percent to 2,434 and Ascent volume dipped 2.9 percent to 5,982.
U.S. deliveries last month also rose 19 percent at Mazda, 18 percent at Volvo, 13 percent at Mitsubishi and 3.9 percent at Genesis.
The final sales tally for February is incomplete. Most automakers, led by the Detroit 3, German brands and Nissan Motor Co., have shifted from monthly U.S. sales releases to quarterly reports.
Overall, U.S. light-vehicle sales were expected to rise in February, helped by two extra selling days, an additional weekend and higher incentives, analysts said.
It’s unclear how much of an impact the spread of the coronavirus will have on deliveries going forward, though several automakers have warned new-vehicle supplies will likely be disrupted by manufacturing and supply chain bottlenecks, mostly in China.
J.D. Power said some automakers are redirecting new-vehicle inventory to the U.S., where the market remains stable, from regions where sales have weakened.
“If the U.S. does not see a severe outbreak leading to travel restrictions and quarantines like China, South Korea, Japan, and Italy, then the impact to the economy and auto market should be subdued," said Jonathan Smoke, chief economist at Cox Automotive . "Nevertheless, cascading issues around the world should cause the U.S. economy to see less growth. Likewise, new vehicle sales could fall from the 16.6 million in our original forecast due to COVID-19."
While the U.S. economy remains on solid footing, slumping equity markets over the last week of the month, a key period for new-vehicle sales, may have rattled some consumers, some analysts say.
Incentives
J.D. Power and LMC said average industry incentives in February were tracking at $4,179 per vehicle, the highest level ever recorded for the month and an increase of $293 from Feb. 2019. TrueCar/ALG estimates average incentives totaled $3,576 last month, a slight increase from Feb. 2019 ($3,568). (See chart below.)
Amid slowing retail demand, automakers and dealers continue to dangle fatter discounts to keep inventories in check and clear out remaining 2019 models. Cadillac is offering up to $20,000 off the outgoing Escalade SUV, Cars Direct reported. Costco is promoting $2,500 in incentives for members who buy an Audi e-tron by March 31. Dodge dangled up to $4,250 in cash allowances on the 2019 Journey crossover.
“Incentives are crazy right now,” said Tyson Jominy, vice president of data and analytics at J.D. Power. “We are seeing Labor Day-like deals in February.”
Jominy said industry incentives are on pace to reach $5,000 per vehicle by the end of the year.
2020 outlook
Overall, analysts expect new-vehicle sales to slide this year as economic growth slows and rising prices force consumers to consider used cars.
The Federal Reserve's decision Tuesday to make an emergency cut in interest rates could also support new-vehicle sales, though analysts say the immediate impact will be minor and that the move was designed to lower any risks the coronavirus would trigger a recession.
In February, the average interest rate on a new-vehicle loan was 5.6 percent and remained under 6 percent for the eighth month in a row, according to Edmunds.
“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.
U.S. light-vehicle sales finished 2019 down 1.2 percent at 17.1 million, with higher fleet shipments offsetting weaker retail volume. Most analysts see 2020 volume dropping to 16.4 million to 16.9 million on lower retail and fleet deliveries.
“We’ve settled at a slower pace over the last few months, and our expectation is the new pace will continue this month and through 2020,” Cox Automotive Senior Economist Charlie Chesbrough said. “We are in the late stage of the sales cycle, and demand is weakening even though incentives are relatively high.”
Odds, ends
- There were 26 selling days last month, up from 24 in Feb. 2019.
- J.D. Power said average incentive spending on cars was on track to rise $97 to $3,746 per vehicle in February, while spending on pickups, crossovers, SUVs and other light trucks was on pace to increase $353 to $4,335.
- The estimated average transaction price for a light vehicle was $37,876 in February, up $975, or 2.6 percent, from Feb. 2019, while falling $126, or 0.3 percent, from January, Kelley Blue Book said.
- The average number of days a new vehicle sat on a dealer lot before being sold to a retail customer was 72 through Feb. 16, J.D. Power said, flat with Feb. 2019.
- Fleet deliveries are expected to total 316,260 last month, a decline of 7.7 percent from Feb. 2019, with overall fleet volume forecast to account for 24 percent of total light-vehicle sales, down from 25 percent in Feb. 2019, J.D. Power said.
Quotable
“Many of the major manufacturers increased prices by more than 4 percent [in January] by capitalizing on the shift toward SUVs. However, trucks, especially full-size trucks, are exhibiting weakness. After prices climbed 3 percent in 2018 and 4 percent in 2019, truck prices are only flat through February 2020. With the GM and Ram trucks in their second year of production and Ford about to sell-down the current F-150 for its upcoming redesign, this year may be a good time to find a deal on a new truck.”
-- Kelley Blue Book analyst Tim Fleming
“Uncertainty seems to be the buzz word for the auto industry right now, even if the causes change. While we expect the light-vehicle market to decline further in 2020, the factors that play a part in that decline are numerous. The coronavirus is not expected to have an immediate effect on sales in the U.S. but its effect on the global supply chain and production puts every global manufacturer and the global economy potentially at risk. A slowing U.S. economy and higher transaction prices are already contributing to the headwinds.”
-- Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive
