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Ford, Chrysler post biggest sales declines as US slump deepens
[SOUTHFIELD, Michigan] Ford Motor Co and Fiat Chrysler Automobiles NV led major automakers posting steeper US sales declines than analysts projected, putting the industry on course for a fourth consecutive month of shrinking demand.
Car and light truck deliveries fell 7.1 per cent at Ford and 6.6 per cent for Fiat Chrysler last month. General Motors Co and Toyota Motor Corp also both reported decreases that were bigger than analysts' estimates, while Nissan Motor Co posted a surprise drop.
Higher auto prices are contributing to the slowdown in US auto sales. The average new-car price in the US rose about 2 per cent over the past year, according to data from TrueCar Inc's ALG. That's an increase more consumers may have been able to handle when borrowing costs were low and loose credit made pricier trucks and sport utility vehicles more attainable.
"With interest rates rising, car loans are becoming less enticing for consumers, which inevitably creates further drag on new vehicle sales," said Jessica Caldwell, executive director of industry analysis for car-shopping website Edmunds.com.
"Inventory buildup is a top concern of automakers and all eyes are on whether cuts in production are enough to offset expected dips in sales." With five of the largest automakers in the US all missing estimates, the industry is likely to fall short of analysts' projected annualised pace of US auto sales, adjusted for seasonal trends, of about 17.1 million, slower than 17.4 million a year earlier. Honda Motor Co is expected to report a decrease of more than 5 per cent.
Fiat Chrysler's New York-traded shares dropped 5.3 per cent to US$10.81 as of 10:14am, while GM slid 3.4 per cent to US$33.05 and Ford fell 4.4 per cent to US$10.92.
Industrywide deliveries have declined in each of the first three months this year and were down 1.5 per cent through March, according to researcher Autodata Corp. Should the slump continue through April, it would reinforce estimates for the US auto market's first annual contraction since 2009, the year GM and Chrysler reorganised in bankruptcy court.
In an effort to keep new vehicles moving off the lots, automakers have ratcheted up discounting. Spending on incentives last month through April 16 reached a record for the month of US$3,499, according to JD Power.