Toyota Motor Corp., American Honda and Kia in July posted their smallest U.S. sales declines since the coronavirus outbreak took hold and four brands chalked up increases, signaling the market continues to recover from the pandemic.
Volume fell 19 percent at Toyota Motor, 11 percent at America Honda and 1.7 percent at Kia, the companies said Monday. Meanwhile, July sales rose 3.4 percent at Mazda and 10 percent at Volvo, but fell 20 percent at Subaru and 21 percent at Genesis.
Among the six automakers that reported Monday, overall volume was off just 12 percent. The rest of the industry releases results quarterly.
The seasonally adjusted, annualized rate of sales last month came in at 14.53 million, Motor Intelligence reported, above the range of forecasts -- 13.3 million to 14.3 million -- from ALG, LMC Automotive and Cox Automotive, but down sharply from a revised July 2019 rate of 17.02 million.
Since April, when the SAAR slumped to 8.81 million, it has slowly recovered, hitting 12.06 million in May and 13.18 million in June, and now more than 14.5 million in July, according to Motor Intelligence.
Toyota, hampered by low inventories and a 30 percent decline in car demand, said sales fell 21 percent at the Toyota division and 6.3 percent at Lexus. Overall, light-truck sales slipped 13 percent in July, Toyota Motor said.
July deliveries fell 13 percent at the Honda division, behind weaker car demand, while Acura racked up a 2.5 percent increase -- its second advance of the year -- behind higher car and light-truck deliveries.
Kia said it set a July record for U.S. retail sales thanks to a 13 percent int crease in light trucks, notably the Telluride, Sportage and new Seltos.
At Subaru, low supplies of four key models -- Forester, Outback, Crosstrek and Ascent -- hampered results last month, the automaker said, adding it expects availability to improve in August with all assembly plants "fully ramped up."
"Overall, we were extremely pleased with our sales results which were delivered by our retailers, who are also persevering through the COVID-19 pandemic,” said Tom Doll, CEO of Subaru of America.
Volvo, which posted its second straight monthly gain, said SUVs and crossovers accounted for 81 percent of July volume, with the XC40 setting a record for the month.
Hyundai, with one of the industry's smallest declines in second-quarter and first-half U.S. sales, continues to benefit from strong retail demand for an expanded crossover lineup, from the subcompact Venue to the large Palisade, while spending less on discounts. Overall sales advanced 0.6 percent.
Retail deliveries of crossovers rose 16 percent to 36,071 in July, Hyundai said, while car sales dropped 16 percent.
The July results mark the brand's first gain in U.S. sales since volume rose 16 percent in February and 4.8 percent in January, before the outbreak hit. Hyundai's average incentive per new vehicle dropped to $2,447 in July from $2,724 in July 2019 and $2,509 in June, ALG estimates.
“Our inventory levels are stable and customers are able to find the Hyundai vehicle that best suits their needs,” Randy Parker, vice president for national sales at Hyundai Motor America, said in a statement. “There is still uncertainty in the economic conditions moving forward, but we will remain laser focused on the customer.”
Before Monday's results were released, ALG, LMC Automotive and Cox Automotive projected an industrywide decline of 13 to 19 percent.
U.S. deliveries slumped 33 percent in the April-June period, which was rocked by shuttered plants and shelter-at-home orders that kept many car shoppers on the sidelines. Sales fell 24 percent in the first half.
Just eight of the top 100 U.S. markets for new car and light-truck sales were expected to see year-over-year gains in July, J.D. Power estimated, noting Detroit, Buffalo and Milwaukee among those regions.
“July represents a slight pause in the overall recovery,” said Thomas King, head of data and analytics at J.D. Power:
Consumer sentiment fell throughout July as COVID-19 cases continued to rise, mostly in the South and West, key regions for new-vehicle sales.
“The market has been making slow but steady gains since April’s low, but there are many headwinds hampering our recovery,” said Charlie Chesbrough, senior economist at Cox Automotive, adding the number of consumers actively shopping for a new vehicle still remains well below normal levels.
High unemployment and uncertainty about the outlook for the U.S. economy is weighing heavily on potential buyers, keeping many out of showrooms. Many older consumers, fearful of the virus and a potential infection, are also delaying car purchases, analysts say.
Mixed inventory picture
Lean inventories, reflecting weeks of downtime and halting restarts at North American assembly plants, also continue to be a drag on sales.
J.D. Power last week estimated 41 percent of all vehicles sold in July will spend fewer than 20 days on dealership lots, up from 35 percent a year ago.
Toyota and Subaru had the tightest inventory levels among major brands in July, both under 40 days of supply, Cox Automotive said. Dealers selling Chrysler, Dodge and Ford products averaged 90 days of supply last month. Among luxury brands, Cox said Lexus had the lowest stockpiles -- nearly 41 days of supply -- while Buick and Jaguar had nearly 130 days worth of inventory.
Despite the upended market, dealers have adopted to the challenging environment and continue to see major growth in new-vehicle sales margins, reflecting demand for popular and more expensive SUVs, crossovers and pickups.
Total grosses, inclusive of finance and insurance income, were on pace to reach $1,922 per unit last month, up $620 from last year and a July record, J.D. Power said.
“The strong per-unit grosses offer some mitigation to the lower sales pace,” King said.
Average incentive spending per unit was expected to reach a July record of $4,236, up from the previous record -- $4,069 in July 2019, J.D. Power said. ALG estimates new-vehicle incentives averaged $3,813 last month, up nearly 3 percent, with the Detroit 3 and Nissan continuing to offer the steepest discounts, though Honda, Subaru and Volkswagen Group hiked spiffs 9 percent or more.
- There were 26 selling days last month compared with 25 in July 2019.
- The average transaction price for a light vehicle sold in the United States was $38,378 in July 2020, an increase of $749, or 2 percent, from July 2019, but down $473, or 1.2 percent, from last month, Kelley Blue Book estimated.
- Incentive spending on cars was expected to rise $269 to $3,886 in July, while spending on pickups, SUVs, crossovers and other light trucks rose $106 to $4,343, J.D. Power said.
- Truck, SUVs and crossover were on pace to account for 75.5 percent of new-vehicle retail sales, the highest level ever for the month of July, J.D. Power said.
- Fleet shipments were expected to total 78,300 in July, down 60 percent from July 2019, and fleet sales were expected to account for 6.5 percent of total light-vehicle deliveries, down from 14 percent a year ago, J.D. Power estimated.
"It seems likely that this inventory problem is going to continue over the course of the summer and maybe through the rest of the year as sales slowly recover.”
-- Charlie Chesbrough, senior economist for Cox Automotive
“Mainstream brands are steadily increasing new-vehicle sales month-over-month, especially brands with healthy inventory levels such as FCA. The Jeep brand stands out for strong performance, likely driven by strong incentive programs as well as the inventory levels needed to satisfy the unique demands of shoppers. On the other end of the spectrum, new vehicles sales for luxury brands, such as BMW and Mercedes, are recovering at a slower rate. Consumers are not going back into the luxury market as quickly as mainstream brands, showing some budgetary discipline in reaction to the macroeconomic environment.”
-- Nick Woolard, TrueCar analyst