Auto Sales in U.S. Drop in June for Fourth Consecutive Month
On Monday, major automakers reported their fourth straight month of lower sales for new vehicle in the U.S. for June, which came in just below expectations by analysts.
This despite big consumer discounts as well as looser terms for loans, providing new evidence 2017 will come up short of the records set last year for automakers.
However, stocks for automakers were higher as their retail sales to the consumer were stable for U.S. carmakers as General Motors asserted that the auto industry was preparing for strong finish to 2017.
Autodata an industry consultant put the auto industry’s annualized rate for sales that are seasonally adjusted at 16.5 million vehicles, which was the lowest since February of 2015.
This was below expectations on Wall Street of 16.6 million units and 2% less than the figure for June of 2016.
Consumers in the U.S. continued shunning passenger vehicles for larger pickups, crossovers and SUVs. Passenger car sales also were hit as some automakers, which included GM, moved to reduce relatively low margin sales to the rental agencies.
The auto industry in the U.S. had braced for the downturn after reaching a record in sales of new vehicles for 2016 of 17.56 million.
A glut of used vehicles created competition for new vehicle sales and automakers relied on more consumer discounts and lending terms being loosened to keep sales buoyant.
Edmunds the car shopping site announced that the average car loan length had reached 69.2 months during June to set a new record.
An industry analyst said that it is financially risky to have such long loans due to borrowers being underwater on their loans for a long period of time.
GM says sales were down 5% compared to June of last year, but the industry would have stronger sales for the second six months of 2017 compared to the first six.
A chief economist for GM said that total sales in the U.S. were moderating because of a pullback industry wide in daily sales to rental companies, but key economic fundamentals in the U.S. remain positive. He added that under the current conditions in the economy, the automaker is anticipating retail sales of vehicles in the U.S. to be good for the foreseeable future.
Ford Motor said, its sales in June were hit by less fleet sales to different rental agencies, government entities and businesses, which fell by 13.9% while consumer sales remained flat.