Auto sales fall again, but buyers flock to SUVs and trucks

Chevrolet cars sit on the lot of a dealer in Pittsburgh this year.
(Gene J. Puskar / Associated Press)

Unemployment is down, consumer confidence is up, and gas prices and interest rates are still low.

Even so, U.S. auto sales fell 3% last month.

It was the sixth straight monthly decline as sales dropped off last year’s record pace. For the first six months, car and truck sales fell 2.1%, the first such decrease since the financial crisis in 2009.

But auto executives and industry analysts say it’s no cause for panic. Sales are still strong and aren’t expected to plunge anytime soon. Plus, buyers are still loading out trucks and SUVs with high-priced options, and that’s likely to boost earnings, at least in Detroit.


Sales are falling largely because people who delayed car and truck purchases in the years since the Great Recession have bought new ones, said Jessica Caldwell, executive director of analysis for

“We’re kind of at the point where we don’t have a boost from that,” she said.

Also, auto companies are cutting lease deals as used-car values fall, curtailing another incentive to buy. And people with lower credit scores are feeling the pinch from lenders tightening standards a bit, sending many into the used car market, Caldwell said.

In June, Ford, General Motors, Fiat Chrysler and Hyundai all reported sales drops. Fiat Chrysler sales were down 7.4%, while Ford said its sales declined 5%. GM was off 4.8% and Korean automaker Hyundai posted a hefty 19.3% decrease.

Nissan, Toyota and Honda each reported small increases Monday, but they weren’t large enough to offset declines in Detroit. Volkswagen brand sales rose 15% over depressed numbers from June 2016.

Autotrader senior analyst Michelle Krebs says the small first-half dip is not an indication of broader economic troubles. She doesn’t expect a big recovery in the second half of the year, but also doesn’t see a huge decline, predicting full-year sales from 16.8 million to 17.3 million. That’s still below last year’s record of 17.55 million.

“We think the second half could be a little bit stronger than the first half was,” said Krebs, who expects 2016 still to be the fifth-best year on record. “We don’t see any imbalances that suggest anything is going to collapse.”


U.S. buyers continued a trend they’ve been following for years, purchasing SUVs and trucks and shunning cars.

Car sales fell 13% in June while trucks and SUVs rose 4%, according to Autodata Corp. Trucks and SUVs accounted for 63% of sales last month. Just five years ago they were less than half.

Sales of Toyota’s Camry, normally the top-selling non-pickup truck in the U.S., fell nearly 10%. But Ford’s F-Series pickup, the top-selling vehicle in America, rose nearly 10%.

Slowing car sales are good for consumers who are looking to buy a car, Caldwell said. Dealer inventories are growing before production cuts take effect and discounts are rising, so now is the time to buy.

Even with the sales decline, auto prices remain high, according to J.D. Power and LMC Automotive. The average vehicle sold for $31,720 in June, a record for the month, surpassing the old record of $31,073 set last year.

Some automakers are having to raise discounts and sell more vehicles to rental car companies to keep their sales numbers up. The average incentive spend per vehicle in June was $3,661 in June, also a record for the month. Even spending on trucks and SUVs is up about $350 from last year, J.D. Power and LMC estimated.



5:50 p.m.: This article was updated with final sales results for June.

10:05 a.m.: This article was updated to add perspective from Mark LaNeve, Ford’s vice president of sales, and Jeff Conrad, general manager of Honda’s U.S. division.

This article was originally published at 7:55 a.m.