Auto sales have a record-high April as buyers flock to SUVs and trucks
America’s love of trucks and SUVs helped push the auto industry to its best April ever, with most automakers reporting healthy increases.
U.S. consumers bought just over 1.5 million vehicles in April, nudging out the old record set in April 2005, according to Kelley Blue Book.
This time, it was consumer demand that was driving sales. In 2005, automakers offered wildly generous discounts and lease deals to keep their factories running. Some sold cars or trucks at a loss. Now, since the companies cut factory capacity during the Great Recession, they’re selling vehicles for strong prices.
“I think it’s full steam ahead,” said Rebecca Lindland, senior analyst for Kelley Blue Book, who doesn’t foresee any economic forces that would cause car sales to slow.
Sales last month rose 3.6% to an annual rate of 17.4 million. Last year the industry set a record with sales of 17.5 million.
Honda and Nissan set April records, Ford posted record SUV sales and Toyota sold more trucks and SUVs than ever.
Honda led major automakers with a 14.4% sales increase as both its cars and SUVs sold well. Nissan’s sales rose 12.8%.
Fiat Chrysler was up 6% on record Jeep sales, and Ford rode an April record for SUV sales to a 4% increase.
Toyota sales rose 3.8% largely because of the RAV4 small SUV, which broke a monthly record with sales up nearly 32%.
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General Motors, Volkswagen and Hyundai were the only major automakers to report sales declines. GM blamed its 3.5% drop on a strategy of cutting low-profit sales to rental-car companies. VW sales fell almost 10% as its emissions-cheating scandal continued. Hyundai sales were off 8.5% from a record April last year.
Ford Motor Co. said it sold more than 65,000 SUVs, the best April in company history, led by the Explorer with a 22% increase. At Nissan Motor Co., cars and SUVs pushed sales up. Fiat Chrysler was led by a 17% increase in sales of Jeep SUVs. It was FCA US’ best April since 2005.
Kelley Blue Book forecasts that sales this year will be flat from last year’s record high, but Lindland said they could even fall a bit as GM and other automakers reduce sales to rental-car companies. Still, she said retail sales to individual buyers would be up, and that is healthy for the auto industry.
Regardless of whether sales keep growing, the overall pace of growth is slowing. Two years ago, for example, April sales jumped 8%, or double last month’s expected pace. J.D. Power and Associates predicted that April sales this year would run at an annual rate of 17.6 million.
For now, the sales outlook is still sunny. Consumers are on track to spend more than $36.9 billion on new vehicles in April, surpassing the previous record for the month set last year, according to J.D. Power and LMC Automotive.
But there are some worrying trends for the industry.
Buyers are flocking to SUVs and trucks, which might force manufacturers to discount cars to move them off lots. That’s good for buyers in the short term, but incentives can flood the market with cars and hurt resale values.
At Fiat Chrysler, car sales fell 8% for the month. Sales of the Chrysler 200 midsize car tumbled 60% to around 7,600. Ford’s car sales fell 12%. Hyundai’s two top-selling cars, the compact Elantra and midsize Sonata, each saw big sales declines. Elantra sales were down 44% and the Sonata was off 15%.
Although sales of sedans are dropping, Lindland doesn’t expect big price wars to develop because many auto factories can now switch easily from cars to SUVs. Many SUVs are built on the same underpinnings as cars.
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Some cars bucked the downward sales trend. Sales of GM’s all-new Chevrolet Malibu and Honda’s new Civic each rose nearly 25%.
Sales to individual consumers also appear to be slowing, so automakers are relying more on less profitable sales to rental-car companies and other fleets. J.D. Power expected April sales to individual buyers to rise 4%, while sales to fleets were expected to jump 8.7%.
John Humphrey, senior vice president of J.D. Power, said auto sales’ slowing growth, the shift away from cars and rising fleet sales “pose significant challenges to manufacturers as they compete in the marketplace.”
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