Major U. S. automakers on Monday reported declines in new vehicle sales in June, as the industry posted its fourth consecutive month of lower sales despite higher numbers at the major Japanese automakers, hefty consumer discounts and looser loan terms.
Automakers’ shares rose as retail sales to consumers were relatively stable at the U. S. automakers, with General Motors Co (GM. N) asserting that the industry was set for a stronger finish to the year.
GM, the No. 1 automaker, said it expected total industry sales to hit a seasonally adjusted annualized rate of 16.6 million units, down more than 1 percent from June 2016. That figure was in line with Wall Street expectations for the month.
The U. S. auto industry has been bracing for a downturn after hitting a record 17.55 million new vehicles sold in 2016. A glut of nearly new used vehicles poses competition for new vehicle sales and automakers have relied increasingly on consumer discounts and loosened lending terms.
Car shopping website Edmunds said the average length of a car loan reached a record high of 69.3 months in June.
“It’s financially risky, leaving borrowers exposed to being upside down on their vehicles for a large chunk of their loans, ” said Jessica Caldwell, Edmunds’ executive director of industry analysis.
GM said its sales fell about 5 percent versus June 2016, but that the industry would see stronger sales in the second half of 2017 versus the first half.
“U. S. total sales are moderating due to an industry-wide pullback in daily rental sales, but key U. S. economic fundamentals clearly remain positive, ” said GM chief economist Mustafa Mohatarem. “Under the current economic conditions, we anticipate U. S. retail vehicle sales will remain strong for the foreseeable future.”
Ford Motor Co (F. N) said its June sales were hit by lower fleet sales to rental agencies, businesses and government entities, which fell 13.9 percent, while sales to consumers were flat.
Wall Street analysts worry that the millions of low mileage, off-lease vehicles poised to hit the market between now and the end of 2019 will weigh on future new vehicle sales.
Ford vice president for U. S. marketing, sales and service Mark LaNeve said on a conference call that the automaker has seen little evidence that its competitors are reducing their reliance on leasing to clinch a sale.
GM shares were up 1.8 percent in afternoon trading on Monday, while Ford shares rose 3.3 percent.
Fiat Chrysler Automobiles NV (FCA) (FCAU. N) said June sales decreased 7 percent versus the same month a year earlier.
Toyota Motor Corp (7203. T) said sales rose 2.1 percent versus June 2016 and said it saw strong gains in the RAV4, a light SUV, sales of which increased 24.7 percent. Sales of another SUV, the 4Runner, rose 16.6 percent.
But sales at Toyota’s Lexus luxury car brand fell 5.4 percent on the year.
Nissan Motor Co Ltd (7201. T) said its U. S. sales increased 2 percent. But while truck, SUV and crossover sales jumped 19.5 percent, sedan sales dropped 12.1 percent.
In the past few years, Americans have increasingly shunned smaller passenger cars in favor of larger vehicles.
Honda Motor Co Ltd (7267. T) said sales for June were up 0.8 percent.
(Editing by Meredith Mazzilli)
