January was a bit of payback for an incentive-fuelled December. Total light vehicle sales dropped 1.9% to 1.14m. The deficit was actually smaller than predicted and translated into a seasonally adjusted annualised rate (SAAR) of 17.61m cars and light trucks, which was also better than expected.
In addition to generous cash-back offers and subvented financing, leasing is playing a large role in deliveries. Kelley Blue Book estimated that leases accounted for about 4.3m deals or approximately 31% of all new vehicle transactions last year, up from 29% in 2015, and their popularity has continued into the new year.
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In addition to leases, buyers are resorting to longer financing. The estimated average loan term was 69 months in 2016.
This isn’t surprising; the growth in average new vehicle transaction prices outstripped growth in incomes so buyers want to get into a new vehicle as painlessly as possible. Leasing also gives the automaker an advantage compared to outright sales: A larger percentage of customers remain with the same brand for subsequent acquisitions.
Crossovers and SUVs continue to be the dominant segment, accounting for 43.2% of total light vehicle sales. That’s an increase of 4.3 percentage points compared to January 2016. Passenger car sales fell 12.8%, giving up 4.5% of their market share. Utilities and pickups were the only growth segments in January.
In contrast to previous months, full-size pickups led the growth in that segment with deliveries up 4.1%. Mid-size trucks were hurt by a big drop in sales of the Nissan Frontier and GMC Canyon.
The top four automakers by volume all finished January in the red. Toyota reported the largest shortfall as deliveries declined 11.3%. A 9.2% drop in Toyota brand sales was magnified by a 25.6% plunge in Lexus sales. FCA was close behind, posting its fifth straight month of shrinking year-over-year sales. Total sales were off 11.2%. Jeep sales have been cooling and the Alfa Romeo and Ram brands were the only ones posting positive numbers. Jeep remained the top crossover/SUV brand in January; the Dodge Grand Caravan was the top minivan..
Ford reported the smallest drop. Sales were off just 0.7% as a 22.4% jump in Lincoln sales was wiped out by a 1.8% decline in Ford brand deliveries. A 17.5% dive in passenger car sales was the culprit.
General Motors’ turnover dropped 3.8% as Buick sales nose-dived 28.2%. Cadillac and Chevrolet were also in the red by 4.1% and 1.9%, respectively. GMC was the only division in the black. Chevy’s alternative fuel vehicles had a strong month. The new Bolt EV posted good numbers and the Volt delivered a 61.7% improvement.
All three Detroit automakers reported reduced fleet sales. FCA reduced daily rental fleet deliveries as total fleet volume dropped 31%.
While Toyota missed its January 2016 numbers, Honda, Nissan and Subaru all reported new January records. Mazda reported its best January since 2012 and strong sales of the Mirage gave Mitsubishi a small gain.
The Koreans were split as Hyundai delivered a new January sales record and Kia fell 7%.
Mercedes-Benz took the top spot in the premium segment, setting a new record. Audi and Porsche also set new records as did Jaguar Land Rover.
Volkswagen sales rose 17.1% in January. Strong leasing programmes have helped VW claw its way back. About 51% of VW brand deliveries were leases.
Though January sales were down, it appears that 2017 could still be a good year for the auto industry. Of course, world events and politics and their effect on buyers’ sentiments are going to be the wild cards this year.
Members’ Report: U.S. light vehicle sales
* indicates a sales record.
**Volkswagen Group figures include Audi, Bentley, Porsche and Volkswagen brands
Other includes estimated sales for Aston-Martin, Ferrari, Lamborghini, Lotus, Rolls-Royce and Tesla
Source: Manufacturer’s reported sales
