April sales fall 4.7% despite strong incentives; crossover sales growing
After seven straight years of growth, U.S. auto sales are finally starting to flatten out. April light-vehicle sales fell 4.7 percent, more than expected, even with hefty incentives an average of more than $3,000 per vehicle, said Edmunds.com and relatively low interest rates. April sales came out at a 16.9 million seasonally adjusted annual sales rate (SAAR), below the 17.1 million NADA is predicting and higher forecasts from some automakers. A few years ago, of course, a 16.9 million sales year would have been very impressive.
General Motors, for one, remains undaunted. When you look at the broader economy, including a strong job market, rising wages, low inflation and low interest rates, and couple them to low fuel prices and strong consumer confidence, you have everything you need for auto sales to weather headwinds and remain at or near historic highs, said GMês chief economist Mustafa Mohatarem. And he made that remark before last Fridayês unexpectedly strong jobs report.
Fordês vice president of sales and marketing Mark LaNeve echoed Mohataremês optimism, saying it was premature to predict full-year sales based on a weak showing in April. We have to let the year play out, LaNeve said. I am not discouraged by the numbers.
Buyersê appetite for crossovers continued unabated. Kurt McNeil, GMês U.S. vice president of sales operations, said that trend will only increase for the industry and GM. Just five years ago, about one in four GM sales were crossovers, he said. Today, they account for almost one-third of our deliveries and we see more growth ahead.
Still, interest rates are bound to increase and used car prices will likely keep declining in the coming months as more leased cars come back to market, Edmunds said. Lower used car prices mean consumers have less equity in their trade-in and may decide to buy a nearly new car instead of a new one.
Dealer inventories are also increasing. GM had 100 daysê supply at the end of April, based on the current rate of sales.Download Bulletin PDF