Toyota, Honda, Subaru post July sales gains as Detroit 3 abandon monthly reports

Honda, Toyota, Subaru, Hyundai and Kia posted higher U.S. sales in July while Nissan and Mazda fell in the first monthly sales report without a Detroit 3 participant.

And in another sign the market continues to cool, the seasonally adjusted, annualized pace of sales come in at 16.82 million, slightly above the average estimates from J.D. Power/LMC Automotive, ALG, Edmunds and Cox Automotive.

It marks the fourth month this year the SAAR has dropped below 17 million. The July sales pace compares to a revised 17.22 million rate for June and 17.06 million in July 2018. The U.S. Bureau of Economic Analysis updated and released on Thursday new seasonal factors used to the calculate the SAAR.

July marks a new era for U.S. sales results tallied by Automotive News as Ford Motor Co. and Fiat Chrysler Automobiles join General Motors in abandoning monthly reports in favor of quarterly. The absence of companies representing 45 percent of U.S. sales will undercut the value of the monthly data as a barometer of the industry’s health.

Industry sales had fallen each month through June, and most forecasts indicated July would be down as well.  Automotive News estimates GM volume rose 7.2 percent last month, while sales dropped an estimated 0.4 percent at Ford and 1.7 percent at FCA, for an overall industry increase of 1.2 percent, the first gain of the year.

Light-trucks sales, up an estimated 6.8 percent in July, continue to support the market, while car demand remains weak, falling an estimated 11 percent last month and year-to-date.  

GM went to quarterly reports last year, abandoning a tradition that begin with the demise of 10-day reports in the early 1990s. Ford stopped public release of its numbers this year while continuing to issue figures to the Automotive News Data Center. FCA will next report in October, at the close of the third quarter. Excluding those three companies, along with Tesla Inc., U.S. light-vehicle sales rose 1.3 percent in July.

Results by automaker

Hyundai’s 12 percent increase marked its 12 straight monthly advance. At Toyota Motor Sales and American Honda, gains at the mainstream brands offset declines in their luxury units.  Nissan and its Infiniti unit were both down as the company continued to scale back its incentive offerings. 

At Honda, July volume edged up 1.9 percent to 141,296 units, with sales up 2.5 percent at the Honda division but slipping 3.7 percent at Acura. American Honda, ending two straight months of declines, said total light-truck demand increased 2.1 percent while car deliveries advanced 1.8 percent in July.

Honda brand light-truck sales, benefiting from the new Passport and higher CR-V and Ridgeline demand, rose 3.1 percent to 68,778, setting a record for the month, the company said.

July volume rose 0.4 percent at the Toyota division but slipped 1.5 percent at Lexus. Overall, Toyota Motor's car deliveries rose 3.6 percent while truck demand slipped 1.7 percent.

At Nissan, which continues to reduce incentive spending and fleet business, volume dropped 9.1 percent, with car deliveries sliding 25 percent. Sales dropped 8.9 percent at the Nissan brand and 11 percent at Infiniti, extending the luxury brand's losing streak to seven months.

Subaru, with new and redesigned crossovers and cars, extended its streak of year over year monthly gains to 92 with a 7.9 percent rise in July volume.

Hyundai's U.S. light-vehicle sales advanced 12 percent in July, helped by higher retail demand driven by new and redesigned crossovers. It was the 12 consecutive month of year over year gains for the brand.

Retail deliveries rose 5 percent in July, Hyundai said, and fleet sales represented 10 percent of volume, or roughly 5,700 units.

In a market increasingly propelled by light trucks, Hyundai is benefiting from the introduction of new and redesigned crossovers: the Santa Fe, Kona and Palisade. Hyundai said retail demand for three crossovers -- Santa Fe, Tucson and Kona -- rose by 11 percent or more last month.

Volume edged up 0.6 percent at Kia and the VW brand produced it's fifth straight gain, but smallest of the year, with a 2.2 percent increase.

Mazda posted its 13th straight monthly decline with a 3.5 percent dip in July volume. Sales of both the Mazda3 and Mazda6 plunged more than 30 percent.

Among other automakers, sales dropped 13 percent at Mitsubishi and 34 percent at Mini. At other luxury brands, sales rose 4.7 percent at BMW, 0.8 percent at Audi, 23 percent at Porsche, 2 percent at Volvo, 4 percent at Land Rover, 7.4 percent at Jaguar and 158 percent at Genesis. 

Market cools

Across the industry, U.S. deliveries dropped 2.4 percent in the first half of the year, with weaker retail demand offset by higher fleet sales.

Higher interest rates and rising transaction prices are undermining showroom traffic, analysts say, even as overall U.S. economic and job growth continues, though at a slower rate.

Average new-vehicle retail transaction prices, driven by the steady consumer shift from cars to light trucks, continue to rise, and were on track to reach $33,065 last month, up sharply from $31,767 in July 2018, J.D. Power estimates.

Discounts

Incentive spending projections were mixed last month, with J.D. Power estimating average spiffs rose to $4,074 from $3,849 while ALG estimates that discounts dropped 2.6 percent to $3,671. (See chart below.) But with inventories starting to stack up on many dealer lots, some automakers enticed consumers with sweeter deals, notably on older stock. Lincoln offered zero percent financing and deferred up to three initial monthly payments on select 2019 models. Honda dangled 36 monthly lease payments as low as $169, and $2,799 due at signing, on some 2019 Civic models.

Odds, ends

• There were 25 selling days last month, one more than July 2018.
• New vehicles are lingering on dealer lots more often, J.D. Power says. Days to turn, or the average number of days a new vehicle sits on a dealer lot before being sold to a retail customer, was 73 through July 21, up 6 days from July 2018.
• Fleet deliveries are expected to total 218,900 in July, down 0.4 percent from July 2018, J.D. Power said. Fleet volume is expected to account for 16 percent of total light-vehicle sales, up from 15 percent last year.
• The average interest rate for a new-vehicle loan dropped for the third month in a row in July, hitting its lowest level of 2019, Edmunds said. The annual percentage rate on new financed vehicles averaged 5.8 percent in July, compared to 6 percent in June. And 35 percent of shoppers who financed a new vehicle in July received an interest rate below 4 percent, compared to 31 percent of buyers who financed purchases in June.

Quotable

"July sales in total are coming near where we expected – a slightly slower pace than the YTD average. Clearly, the market remains on solid ground and buyers are still in the new-car market even with higher prices. Strong sales of some small cars may suggest that affordability shoppers have not abandoned the new-vehicle market. Given the strength of used-vehicle prices, and supply constraints limiting selection, more interest in lower-priced new vehicles is not surprising."

     -- Charlie Chesbrough, senior economist for Cox Automotive

“There are signals that auto sales in the second half of 2019 are poised to outperform expectations. While trade risk remains a threat, transaction prices continue to rise and economic growth is moderating, sales in the second half of the year could outperform expectations consistent with strength in the previous five years.”

    -- Jeff Schuster head of global vehicle forecasts at LMC Automotive