US light-vehicle sales volumes in March dropped 1.7% year on year (y/y) to 1.55 million units, giving a seasonally adjusted annual rate (SAAR) of 16.5 million units for the month. IHS Markit maintains its projection for full-year sales of 17.4 million units.
IHS Markit Perspective
- Significance:Despite high incentives, light-vehicle demand in March was soft, with auto sales at a 16.5-million-unit seasonally adjusted annual selling rate (SAAR) and unit volume down by 1.7% year on year (y/y).
- Implications:Although March's slower pace damped first-quarter results, 2017 remains an overall positive environment, after US sales completed an unprecedented streak of seven straight years of growth in 2016. As the market cools manufacturers are turning to incentives-related tactics. March incentives increased y/y but declined from February.
- Outlook: For the first quarter, light-vehicle sales volume slipped 1.6% y/y. March sales brought the first-quarter selling rate to an average of 17.16 million units, below the year-earlier result of 17.31 million. Given sustained inventory and incentive levels, IHS Markit expects sales in the second quarter to accelerate. We therefore maintain our light-vehicle sales projection of 17.4 million units for the year.
After spending 2016 reducing fleet sales, General Motors (GM) in 2017 continues to focus on growing retail sales and share, reducing daily rental deliveries and maintaining operating discipline. GM sales in March grew by 1.6% year on year (y/y) and it reported a 5% increase in retail sales. GM inventory came in at 98 days at the end of March. Buick sales gained 15.1% y/y in March 2017, on the addition of the Envision and gains for the Encore, but in the year to date (YTD) the brand is down 7.5%. Cadillac reported a 1.5% decline in March, and is down 4.6% YTD. The XT5's performance was stronger than the March 2016 performance of the SRX that it replaced, but sales for all other nameplates declined. Chevrolet's volume was down 2.2% y/y in March. The largest and most mainstream of GM brands booked lower sales for the Malibu and Impala as well as pickups, although the Cruze had a strong month. Bolt EV sales reached 3,092 units in the first quarter. GMC posted a 12.0% y/y increase, on the new GMC Acadia and a 29% penetration rate for the Denali sub-brand.
After a volatile 2016, Ford Motor Company sales declined the first three months of 2017. YTD sales have contracted 4.4% and March sales dropped 7.2%. Ford-brand sales dropped 7.5%, while Lincoln showed a drop of 1.4%, following the brand's recent trend for less frequent declines. Overal Ford Motor Company car sales in March slumped 24.2% y/y with utility-vehicle sales down 3.4% y/y but truck sales up 2.5% y/y. On a volume basis, the company sold 18,306 fewer cars and 2,675 fewer utility vehicles in March 2017 than in March 2016, while truck sales increased by only 2,520 units. Ford-brand car sales were off by 25.6% y/y, with the Focus and Fusion registering plunges. Lincoln's all-new Continental drove Lincoln car sales up by 6.2% y/y in March. But Lincoln utility sales dropped by 5.3% y/y.
FCA's overall sales declined again in March, dipping 4.6% y/y. FCA said it continued in the month its planned reduction in sales to rental fleets (coinciding with the elimination of the Chrysler 200, Dodge Dart, and Jeep Patriot/Compass) and reported a 15% decline in fleet sales. Sales increased in March for the Dodge (up 9.7%), the Ram (up 6.0%), and Alfa Romeo (with the addition of the Giulia). Jeep sales slumped 11.2% while Chrysler sales plunged 33.1% and Fiat sales fell 5.3%. FCA's sales of trucks and LCVs gained 6.0% y/y to 51,479 in March. Its utility-vehicle sales slipped 4.1% y/y to 87,073 units and its sales of cars and MPVs dropped 14.1% y/y to 51,432. On a volume basis, the increase in the truck/LCV category was outweighed by the decline in other categories. FCA sales throughout 2017 will be affected by the launch of the new Compass and the withdrawal of the vehicles mentioned.
Toyota has now posted three months of decline, although the drop narrowed in March to a slide of 2.1% y/y. Its YTD sales are down 6.7% y/y. Toyota's overall car sales slipped 9.9% y/y in March, with the Toyota brand posting a 7.3% decline and the Lexus brand a 28.2% y/y slump. Truck side picked up 5.5% y/y, with Toyota-brand volumes up 4.8% and Lexus-brand sales up 9.5% y/y. While the Camry was the best-selling passenger car in 2016, an all-new version is being launched in mid-2017 and the combination of market trends and a changeover year suggest the Camry may have a difficult 2017. In March, the sedan's sales dropped 3.6% to 35,648 units.
The RAV4 slipped back in February and March after outselling the Camry in January but may still prove Toyota's best-selling product in 2017. Lexus cars all booked double-digit y/y sales declines and Lexus utilities registered mixed results.
American Honda's March sales edged down 0.7% y/y although its YTD sales are up 2.1% y/y. Honda Division sales grew 1.8% y/y to 125,531 units in March, while Acura sales dropped 21.2% to 11,696. After lagging in 2016, Honda-brand SUVs have overtaken its car lines in sales volumes in the YTD (169,731 units versus 163,800). In March, however, Honda cars outsold Honda trucks by 1,581 units, despite the all-new CR-V and new Ridgeline. The Accord remains third in sales volumes, behind the CR-V and Civic, an order largely expected to persist. Acura, which continues to draw more than 70% of its sales from the MDX and RDX, registered SUV sales down 15.8% in March and car sales down 30.6%.
Nissan Group's sales improved in March by 3.2% y/y and in the first quarter by 4.2%. Nissan Division sales edged up 0.5% in March and Infiniti sales jumped 32.6% y/y. Nissan Division car sales fell 17.0% while truck sales climbed 25.6%. Infiniti's car sales were up 6.5%, with an updated Q50 and new Q60 coupé. SUV sales leapt 54.6%, with a 2,960-unit assist from the all-new QX30.
Subaru delivered a 64th consecutive month of y/y growth, with an 11.3% y/y gain. Sales of the all-new Impreza soared 47.4% y/y. Forester sales were up 10.6% y/y and Outback sales improved 12.7% y/y. Mazda is seeing welcome gains so far in 2017, with March sales up 4.9% y/y. The Mazda3 and CX-3 continue to struggle but the CX-9 and MX-5 registered strong gains. The all-new CX-5 arrived at the end of March.
Volkswagen Group sales grew 2.7% y/y in March as each of its brands reported a y/y gain. Volkswagen brand was up 2.7%, as the Golf family, the Passat, and the Tiguan picked up the pace. Audi reported its 75th straight month of sales growth, up 1.7% y/y, and Porsche gained 3.6% y/y. Sales for Hyundai and Genesis (53,020 units, flat) and affiliate Kia (42,673 units, down 14.2% y/y) gave a combined 11.2% decline. Sales for the Hyundai brand itself dropped 10.4% y/y. For the Genesis brand, the G90 outperformed the G80 in comparison with the Hyundai models they have replaced. Sales for the G80 were 64% lower than for the Hyundai Genesis it replaced, which Genesis attributed to low inventory. G90 sales reached 408 units in March, up from Hyundai Equus sales of 7 in March 2016. Kia products declined y/y in March and, although the addition of the Niro will help throughout the year, 2017 has had a tough start for the automaker.
Outlook and implications
With a 1.6% y/y volume drop, light-vehicle demand finished the first quarter on a down note. March sales translated to a 16.53-million-unit seasonally adjusted annual selling rate (SAAR), below the demand results of the prior two months and the lowest monthly SAAR pace since February 2015. March sales brought the first-quarter selling rate to an average of 17.16 million units, below the year-earlier result of 17.31 million. Light-truck sales continue to motivate the market and, with sustained inventory and incentive levels, IHS Markit expects second-quarter sales to pick up. We therefore maintain our light-vehicle sales projection of 17.4 million units for the year.
There were 27 selling days this March, as in the year-earlier period. On a unit volume level, 1.55 million light vehicles were sold, down 1.7% y/y. This results in a first-quarter sales volume of 4.03 million units, down more than 58,000 units from last year's period.
Similar to the preceding two months, and reflective of the low growth environment of the first quarter, auto manufacturer performances were mixed in March. Volume growth was led by Nissan, up 3.2% for the month, followed by GM with a 1.6% y/y improvement. Volumes dipped for all other major automakers, led by Ford (down 7.2%), FCA (down 4.6%), Toyota (down 2.1%), and Honda (down 0.7%).
Light-truck sales continue to dominate the landscape as pickup trucks, low fuel prices, and weather-induced preference for all-wheel- and four-wheel-drive utility vehicles pushed sales throughout the first quarter. Through the first three months of 2017 light-truck sales were up about 150,000 units from last year. Passenger-car sales fell 208,000 units from first-quarter 2016 levels. In March, passenger-car sales fell 11.5% y/y while light-truck sales gained 5.6%. Light-truck sales accounted for 61.9% of light vehicle demand, up from 57.7% in March 2016.
With the moderate sales pace in March, month-end vehicle stocks were above month-end February levels, fanning expectations that high incentives and clearance activity will remain part of the near-term demand equation. Month-end inventory in the United States for Ford was 701,800 units, up 19,700 from February 2017, with stock split between 168,100 cars and 533,700 light trucks. GM inventory grew 25,500 units from February 2017, ending the month with stock of 926,170 units, or a 98-day supply.
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The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.