Sedan sales are way off, but cuts to fleet sales are also to blame.

The numbers are rolling in for July auto sales in the United States, and it’s not looking good for automakers. Analysts were expecting to see another decline – the seventh consecutive month of falling numbers overall – but the preliminary figures are trending on the steep side, especially for the folks from Detroit. How steep you ask? Going by the numbers, Ford logged a 7.6 percent drop from last July, while Fiat Chrysler Automobiles hit double digits with a 10 percent skid. Still, both are pale in comparison to the 15 percent nosedive felt at General Motors. Even Volkswagen, which continues to feel the burn of dieselgate, fared considerably better with only a 5.8 percent drop. Still, could be worse.

Hyundai logged a 28 percent gut punch compared to July 2016, which was the manufacturer's best-ever sales month. On the flip side from South Korea, Kia only registered a drop of approximately 1 percent. It should be noted that Hyundai reported a large cut to fleet sales, which the manufacturer says plays a significant role in the decline.

 

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U.S. automakers (and Hyundai) are definitely taking it on the chin compared to Japanese rivals, though declines are still the general order of the day. Nissan North America dropped approximately 3 percent, as did Mazda. Honda only fell off the pace by a single percent, while Toyota is part of the exclusive club of manufacturers to actually post a gain, and it was an impressive 4 percent to boot. Meanwhile, the folks at Subaru must have some kind of magic beans, because the automaker posted its best-ever July with a 7 percent sales jump.

 

 

As for European automakers, we mentioned Volkswagen’s drop but Audi joins Toyota and Subaru in the black with a 2.5 percent gain compared to July 2016. BMW didn't fare nearly as well, posting whopping 14.8 percent decline. We’re still waiting to hear from Mercedes-Benz and Jaguar.

When all is said and done, average sales across all manufacturers are estimated to be down between 5 and 6 percent as compared to July 2016, though Detroit automakers are averaging well below that mark at 10 percent.

As is always the case, however, there’s more to these numbers than meets the eye.

Digging a bit deeper, we see domestic cars sales are generally down – in some cases way down – compared to trucks, sport-utility, and crossovers. For example, over sales at FCA were down but Ram truck sales broke even. Chrysler enjoyed a 5 percent increase in Pacifica sales, while the 300 sedan saw a surprising 31 percent gain. At Ford, SUV sales climbed slightly, and though overall truck sales were down 7 percent, it’s due to Transit and Transit Connect sales which are included in the segment. F-Series pickups posted a gain of nearly 6 percent, but it wasn’t nearly enough to offset the 20 percent drop in auto sales, led by a whopping 42 percent drop in Ford Fusion sales.

 

 

Detroit automakers also reported a significant cut to fleet sales in July similar to Hyundai, which certainly has a negative impact on sales figures. Lease deals – which according to The Wall Street Journal have accounted for 31 percent of retail sales so far through 2017 – also aren’t quite as lucrative as they’ve been in the past.

Does all this point to impending doom for the auto industry? While the numbers don’t look very good, many analysts and experts aren’t particularly concerned. For starters, manufacturers are still profitable despite the declining sales, and let’s not forget that 2016 was a record sales year capping a consistent years-long increase in auto sales. The trend was bound to slow at some point, and there were many predictions that 2017 would be the year it happened so this isn’t entirely unexpected.

The question people are asking now is whether sales will stabilize to a new normal, or continue dropping. 

Source: Automotive News, The Wall Street Journal

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