July Car Sales: Solid Retail Sales, Weak Fleet Orders
July car sales totaled 1.153 million vehicles, up 9 percent from July 2011 but down 10 percent from June. The Seasonally Adjusted Annual Rate (SAAR) of sales at 14.1 million vehicles, compared with 12.2 million last July and 14.1 million in June. July results were in line with industry forecasts, including Edmunds.com's.
In contrast to May which finished weaker than expected and June that finished stronger than expected, July saw a steady pace throughout the month with no surprise finish," said Edmunds.com Senior Analyst Jessica Caldwell. "The results were fairly close to expectations."
Drivers for strong July car sales were the continued unleashing of pent-up demand, with the average vehicle on the road being about 11 years old. "We're seeing the need-based buyer in the market," said Caldwell, noting that Edmunds.com data showed the average trade-in in July was 6 years old, about the same as every month in 2012 but far higher than in years past. The unleashing of pent-up demand is supported by wider credit availability as indicated by attractive interest rates and lease deals on the market.
Despite a lower SAAR than previous months of the year, Edmunds.com does not see a slowing of auto sales beyond the traditional pace, which has sales softer in the second half than the first half. "I do not believe that this is a sign that the economy is slowing," said Edmunds.com Chief Economist Lacey Plache. "If anything, the fact that auto sales remain strong and on track for sales of 14.4 million for 2012, or nearly 13% growth over 2011, gives hope that there is a floor to recent weakness in other economic indicators, and that autos could be a strong contributor to continued economic growth."
Plache added that pent-up demand for autos is still strong and can be expected to continue to contribute sales, given the aging fleet and the current expansion of credit. "While consumer uncertainty about economic conditions remains a risk for slowing auto sales, July's confidence index increased somewhat, which again indicates a floor to what had been a trend of sagging confidence," she said.
GM: General Motors' sales dropped 6 percent from a year ago to 201,237 vehicles, a larger decline than Edmunds.com had forecasted. GM blamed the decline on lower sales to daily rental fleets, which were down 41 percent from a year ago, but sales to retail customers also declined -- by 3 percent. GM said total fleet sales were down 15 percent, most of which were in the daily rental car category. Commercial fleet sales rose 41 percent; government sales, driven by strong sales of police vehicles, soared 115 percent.
Cadillac was the only one of GM's four division to report higher sales than a year ago -- up 21 percent. The new flagship XTS sedan chipped in 1,739 sales, while CTS, Escalade and SRX also reported higher sales than a year ago. Edmunds.com statistics showed that the XTS was the industry's fastest-selling vehicle in June, as it was just hitting the market, and Cadillac's advertising struck gold with its London Olympics advertising with shopping consideration for the new nameplate soaring.
"Cadillac hit a home run and our newest Chevrolets and Buicks are performing very well," said Kurt McNeil, vice president, U.S. Sales Operations. "Signs of a housing recovery and good news on consumer confidence and household income should help keep the light vehicle selling rate in the 14-million range and drive seasonally higher truck sales as we move toward fall."
Indeed, GM's newest models performed well. Buick Verano sales have increased each month since the car launched in December 2011 with July being no exception. Verano sales totaled 4,235 cars. However, that wasn't enough to push Buick sales to the positive side. Buick sales dropped by 15 percent, with every model posting a decline.
Chevrolet's newest models also are performing well. The Chevrolet Sonic has led the subcompact segment since April, and July sales totaled 6,278 units. The Chevrolet Spark microcar had its first month of sales in July with 1,460 sold. But some other Chevrolet cars, including its high-volume models, are struggling. Sales of the Chevrolet Cruze plummeted 39 percent in July. GM blamed lower fleet sales – virtually none versus 26 percent of all Cruze sales a year ago – and tough comparisons with last July when the Cruze filled a gap left by Toyota and Honda due to product shortages caused by the Japan earthquake. Edmunds.com's calculations of days-to-turn, the number of days when a car arrives at a dealership to when it is sold to a customer, is a hefty 74 days, compared with the segments average of 40 days. GM's total days-to-turn is higher than the industry average, 82 days versus the industry's 56, according to Edmunds.com's estimates.
The high-volume Malibu also had sales down 37 percent, despite offering the high incentives in the midsize sedan segment. Chevy is in the process of selling down the old model to make way for the new one that has only been available in Eco version since January.
Chevrolet faces another problem: customer loyalty. Indeed, customer loyalty is a good thing and Chevy has one of the highest in the auto industry. But, as Edmunds.com's Caldwell notes, that's a double-edged sword. "The flip side is GM isn't doing a lot of conquest sales from other brands." GM launches new models like the Cruze and sales soar as buyers trade-in their own GM vehicles for the new model. On the plus side, GM has a number of new or freshened models upcoming, including the Buick Verano Turbo, Buick Enclave, Chevrolet Malibu Turbo, Chevrolet Traverse and GMC Acadia. GM revises its full-size pickup trucks in 2013. In July, GM's sales of the Chevrolet Silverado and GMC Sierra were down double digits, while other automakers reported higher full-size pickup sales.
On July 10, GM launched the Chevy Confidence program, which includes a return policy and no-haggle prices, but the incentives aren't as good as before and consumers have noticed. "Savvy consumers don't see tremendous value in the Confidence program," said Edmunds.com's Caldwell. "The Confidence pricing was similar in many cases to our True Market Value (TMV) pricing, and for some vehicles, it was even higher. So, depending on the situation, a consumer could have gotten a better deal before the program started." The program has received a tremendous amount of publicity but GM isn't spending all that much on it. According to Edmunds.com's True Cost of Incentives (TCI), GM incentives fell 0.3% from June to July. GM's spending on Chevrolet alone is down even more – 5 percent – from $3,328 in June to $3,176 in July.
GMC sales dropped 9 percent to 34,487 vehicles.
Ford: Ford Motor Co. reported sales of 173,966 in June, a 4-percent decrease compared with July, 2011, as a sharp decline in fleet sales combined with two fewer selling days to pull Ford's overall sales lower. For the Detroit automakers, July typically is a lull month for fleet transactions and the company took pains to point out that its retail sales were up two percent compared with last July.
Still, it was a rare off month for Ford and several important models didn't perform particularly well – for a variety of reasons, Ford sales officials said. The Escape compact crossover, for example, is transitioning to the all-new 2013 model, but July sales slid 12 percent to 21,572 units. In late July, the Escape was hit with a high-profile recall of certain models to prevent potential engine fires and a few thousand vehicles were damaged by hail and could not be sold, but chief of U.S. sales Ken Czubay said the new-generation Escape nonetheless is the model with the lowest days' supply in the company's entire model range. Indeed, the Escape was the second most shopped vehicle on Edmunds.com in July.
Ford's perpetual best-seller and volume leader, the F-Series full-size pickup, also had a flat month, with sales up a scant 0.4 percent, despite the fact that the discontinued Ranger midsize pickup now is all but gone from dealer lots; Ford sold 413 Rangers in July, compared with 6,410 during the same month last year. In all, Ford truck sales in July were off 9 percent, although they remain up 6 percent for the year.
Despite the presence of a well-publicized, all-new model in the wings, Ford's Fusion midsize sedan had its best-ever July, finding 23,326 buyers, a 21-percent improvement. Fusion incentives were the second highest in the midsize sedan segment behind the Chevrolet Malibu. Deals to move stocks of the soon-to-be-replaced Fusion might have accounted for some of the decline in sales for the Fiesta subcompact, which was off a heavy 23 percent in July to 4,059 units; more troubling for Ford, Fiesta year-to-date sales were down 25 percent after July's showing. Most of Ford's other cars posted strong gains in July, however, with the Focus up 11 percent (16,454 units), the Taurus gaining 15 percent and the Mustang up 8 percent to 7,371 sales.
The Lincoln upscale division endured a 11-percent drop in July, with sales of every nameplate save the entry-level MKZ (+6 percent) and the MKT crossover, declining for the month. The brand managed just 6,975 total sales in July – the entire Lincoln line was outsold by Ford's Mustang – and thanks to the ongoing phase-out of the fleet-favorite Town Car, year-to-date Lincoln sales were underwater by 2 percent to a total of 48,937 sales for the first seven months of the year.
Toyota: Toyota Motor Sales reported sales of 164,898 units, up 26 percent from a year ago. The Toyota Division had sales of 146,663 units, up 26 percent. Lexus sales were up 25 percent to 18,235 vehicles. Scion sales skyrocketed 97 percent to 6,904 vehicles.
"Toyota continues to bounce back from last year's inventory shortage caused by the earthquake and tsunami in Japan," said Edmunds.com's Caldwell. "The onslaught of new and refreshed products certainly helps as does the expanded Prius family which has proven to be very popular every time high gas prices plague the country."
As always, the Toyota Camry, redesigned last fall, led Toyota's surge and retained its spot as the nation's best-selling car. Sales of Camry and the Camry Hybrid totaled 29,913 units. Corolla reported July sales of 23,640 units, up 34 percent. The Prius family of vehicles posted July sales of 16,643 units, up 111 percent. Toyota Division light trucks recorded July sales of 66,602 units, an increase of 19 percent. Truck sales were led by the RAV4 and Tacoma, with monthly sales of 15,248 (up 73 percent) and 11,350 (up 27 percent), respectively. Highlander and Highlander Hybrid reported combined sales of 10,669 units (up 12 percent), and the Tundra full-size pickup reported sales of 9,176 units (up 18 percent). Posting declines were the FJ Cruiser, Venza, Sequoia and Avalon, which is being replaced in December with a new, more stylish model.
At Lexus, the new ES 350 sedan led car sales with sales of 3,759 units sold, up 32 percent. Sales of the new GS models soared 410 percent to 1,662 units. RX sales were up 35 percent to 7,357 as Lexus sells down the old model for the new one. A number of other Lexus models posted sales declines. "Our new and redesigned models continue to drive our sales growth," said Lexus Group vice president and general manager, Mark Templin. "With good availability of the new 2013 RX, and with the all-new ES and ES Hybrid arriving at dealers nationwide, customers will find a great selection in August during our Golden Opportunity Sales event."
At Scion, all models posted gains. The new FR-S sports car sold 1,649 units.
As for hybrids, Toyota sold 23,044 hybrid vehicles in July, an increase of 126 percent compared to the same period last year. Hybrid strength from the Prius, which has added two new family members, the entry-level Prius C and the larger Prius V.
Chrysler: Chrysler Group reported sales of 126,089 in July, a 13-percent increase compared with July, 2011. The result was the best July for Chrysler since 2007 with sales for each of the company's five brands improved compared with the same month last year.
Chrysler's sales leader in July was the Jeep brand, which accounted for 41,559 units of the company's monthly sales total, a 7-percent increase compared with the same month last year. Jeep's Liberty led the pace with a 34-percent gain to 7,803 sales, and the Patriot compact crossover was up 28 percent to 5,870 units, while sales for the Grand Cherokee were up a solid 22 percent to 11,571. Sales for the Wrangler, the brand's volume leader at 12,216 sales in July, were down 15 percent, however.
There were no losers for the Chrysler brand, with July sales up 43 percent for the 200 midsize sedan (to 9,287 units), 41 percent for the 300 full-size car (to 3,399 sales) and 25 percent for the Town & Country minivan to 8,106 units. Through July, the Chrysler unit's sales were up 69 percent. The Caravan minivan was the July bestseller for Chrysler's Dodge brand, improving sales 43 percent to 9,247. Sales for the Journey compact crossover jumped 60 percent to 7,051 and sales for the Charger and Avenger were up a respective 21 percent and 43 percent. The Durango crossover slid by 49 percent to 2,736 units. And sales were off by 84 percent in July for the phasing-out Caliber compact car, while Dodge marked 774 sales for the all-new Dart, which takes over for the Caliber.
Chrysler's Ram division moved 17 percent more full-size pickups compared with July, 2011, totaling 23,824 sales and racked up 555 incremental sales in the form of the new Cargo Van, which was not on sale last year.
July sales also improved strongly for Chrysler's Fiat unit, where 3,710 sales of the 500 subcompact represented a 22-percent improvement compared with last year. Through July, Fiat moved 24,416 copies of the 500 – a 206-percent jump over last year.
Honda: American Honda reported sales of 116,944 in July, a 45-percent increase compared with July, 2011. In July of last year, Honda's market share hit a low not seen since 2005, as Honda's U.S. supplies bottomed in the aftermath of the March, 2011, earthquake and tsunami in Japan. That low enabled the nearly 50-percent sales jump Honda managed in July, as a year after the earthquake, inventories seemingly are once again up to battle speed.
"As our sales momentum continues to build through the summer, Honda is experiencing its best year-to-date sales in four years," said John Mendel, American Honda executive vice president of sales. "With success growing along with inventory, it's wonderful to once again be able to meet the strong retail customer demand for our great Honda products."
Following up on June's solid performance, Honda got a big month from some of its most-important players. On the car side, the Civic compact exploded for a 78.8-percent gain, racking up 25,004 sales to emerge as the segment's best-seller by a large margin. July's performance also yanked up Civic year-to-date sales to a hefty 187,586, a 32.5-percent improvement compared with the same period last year, causing the critically unacclaimed Civic to emerge as Honda's current best-selling model. There was a nearly-as-hefty gain for the Accord, where 28,639 sales translated to a 70.2-percent gain over last July. The downside was represented by the Fit subcompact, which dropped 5.1 percent to 4,608 sales, a big plunges for Honda's low-volume hybrids: a 57.5-percent slide for the Insight hatchback, to 419 units, and a 62.4-percent dropoff for the CR-Z coupe, the 330 units. Honda's truck sales were up virtually across the board save for the small 2-percent loss for the Pilot midsize pickup. The CR-V was the largest gainer, with a 47.4-percent leap to 20,554 sales.
Honda's Acura upscale division also benefited largely from expanding inventory and sprung to a 36.4-percent gain overall, led by a giant 142.2-percent improvement for the redesigned RDX compact crossover, to 2,664 sales and a 24.7-percent gain for the MDX midsize crossover. All of Acura's car lines' sales declined in July, however.
Nissan: Nissan North America met Edmunds.com's expectations precisely with sales of Nissan and Infiniti brand vehicles totaling 98,341 vehicles, up 16 percent from last July. Nissan sales hit 86,722, up 12 percent. Infiniti finished the month with sales of 11,619 vehicles, up a hefty 57 percent, for its best July in seven years. Of the Big 6 automakers in the U.S., Nissan had the biggest shift in incentives spending, up 18 percent from June and 16 percent from last July. In contrast, the industry in total was even with June's incentives spending and down from last July. Nissan spent an average of $2,827 per vehicle in July incentives, compared with the industry average of $2,236 per vehicle. Infinti, which had special promotions in July accounted for much of the higher spending, with Infiniti spending alone up 22 percent from June. Nissan also continues to sell down the old Altima with hefty incentives. Al Castignetti, Nissan Division vice president and general manager, said the automakers incentives spending will drop dramatically in August.
The Nissan Altima achieved a July record of 26,602 vehicles, up 25 percent from a year ago. July marked the first full month of sales for the completely new 2013 Nissan Altima, though sales of the new model accounted for only 35 percent of all Altima sales and Nissan dealers have only 10,000 units of the 2012 Altima, which should be completely gone in 60 days, said Castignetti. The Altima is critically important to the automaker as it accounts for 27 percent of all Nissan and Infiniti sales combined. "The feedback we're getting from dealers on the 2013 Altima is that it is red hot," Castignetti told Edmunds.com. "Buyers are both current Altima owners and conquest buyers from other brands, and the people who have bought them absolutely love them."
The Nissan brand saw strength in other models as well. The Rogue crossover had its best-ever July with sales of 13,193 vehicles, up 17 percent. Versa sales soared 39 percent; Sentra was up 13 percent. Nissan sports cars – the 370Z and GT-R – were up 19 percent and 129 percent respectively, albeit on tiny volume. On the truck side, the Frontier and Titan posted 16 and 11 percent gains, respectively. The all-electric Nissan Leaf had a skimpy 395 sales versus 931 a year ago. Sales of large SUVs were off with the Nissan Armada down 8 percent and its sibling, the Infiniti QX, down 12 percent.
Infiniti is finally regaining its footing after being crippled last year by the earthquake and tsunami in Japan which hampered its vehicle production. Ben Poore, who heads Infiniti's U.S. operations, said the division has focused most of its attention on two models, the Infiniti G sedan and the new 7-passenger JX crossover. Laser focus paid off with the G sedan posting a whopping 89-percent sales gain to 6,978 vehicles in July -- its best July ever. The new JX, on sale since March, kicked in 1,999 units of sales. Except for the G coupe, which had a 1 percent gain from a year ago, other Infiniti models posted sales declines in July.