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January 4, 2019

A lovely holiday gift to US light vehicle sales

American consumers weren’t deterred by December’s rising interest rates, market turmoil and political shenanigans. Instead they propelled the auto industry to its fourth 17m year.

By bcusack

American consumers weren’t deterred by December’s rising interest rates, market turmoil and political shenanigans. Instead they propelled the auto industry to its fourth 17m year.

When the sales year ended on 2nd January, automakers had delivered 17.33m light vehicles, a 0.6% improvement over 2017.

The December’s seasonally adjusted annualised rate came in at 17.72m, the best reading of the year and well ahead of the 17.44m from a year ago and the 17.55m measure in November 2018.

Analysts estimate that the average transaction price hit US$37,577 last month, (GBP29,737), an increase of about 1.3% from December 2017 but down slightly from November. Ford noted that its average transaction price set a new record of $38,400 (GBP30,393) last month.

Incentive spending was largely flat in December. Rebates and dealer discounts have largely supplanted discounted financing and zero-percent offers have virtually disappeared. With the recent increase in the prime rate, no one is looking for them to return. Subvented leasing is still an option with a number of car companies.

Petrol prices have favoured the utilities and pickups preferred by Americans. The average cost of regular unleaded has fallen 9.5% from last year to about 47p per litre.

FCA emerged as the best performing of the traditional Detroit 3, thanks to strong year-end finishes from the Ram, Dodge and Jeep brands. While retail deliveries were up, the real key to the growth was a return to more fleet transactions. Part of the reason for FCA’s results is that the company is close to becoming a pure-play light truck manufacturer. Passenger cars made up just 8.4% of total company volume and just 7.7% of its American brand deliveries. Utilities and the Ram pickup accounted for 78.5% of total Chrysler, Dodge, Jeep and Ram sales.

The American muscle car remained a factor even as the Detroit 3 continued to introduce more powerful – and more thirsty – versions. There was a 9.7% decline in deliveries in 2018 but that was much less than the drop in overall passenger car sales. The Ford Mustang led the pack, followed by the Dodge Challenger, which outsold the Chevrolet Camaro.

The champagne was flowing at Subaru of America, which celebrated ten consecutive years of record growth with its best sales month ever. FCA posted new annual sales records for the Jeep and Ram brands as well as a new full-year record for the iconic Wrangler. Jaguar Land Rover set a new December benchmark while the Land Rover brand broke all previous U.S. annual sales records.

Toyota edged out Jeep as the top utility brand in December by a razor-thin 269 sales. However, Jeep had already seized the FY honours before the end of November. In terms of total sales in the segment, General Motors was the winner, followed by FCA and Toyota.

In a close battle, Mercedes-Benz emerged as the top brand in the premium segment, though it lost to BMW in December. Lexus came in third. Despite tumbling sales in recent months, Audi held on to finish fourth among the upscale brands.

Ford’s F-series enjoyed its third-best-ever sales year as it notched its 42nd consecutive year as America’s favourite pickup and its 36th year as the best-selling vehicle of any type. Given that the median age of Americans is 37.8 years, nearly half of the nation doesn’t remember any other car or truck being the top-selling vehicle.

The American full-size pickups topped the charts in both monthly and full-year tallies. Combined FY sales of the Ford F-Series, Chevrolet Silverado, GMC Sierra and Ram totalled more than 2.25m units and accounted for nearly 13% of total light vehicle volume.

GM says it expects better pickup sales in the coming months as the transition to the new models is completed.

With four lines, the General easily finished as the leading pickup manufacturer but things could get very interesting this year if Ford’s new Ranger takes after its larger sibling.

Ford also completed its fourth decade as the leading manufacturer of commercial vans and LCVs. The three Blue Oval lines claimed 47.7% of deliveries.

Though it is small the segment is another bellwether for the industry as sales in the segment are almost entirely to businesses and fleet operators. Deliveries of vans grew 2.0% in 2018. As was true of the full-size pickups, GM was the runner-up with FCA taking the show position.

Of note is the announcement that General Motors has reached the magic number for electric vehicle deliveries and will now see the phase-out of the government’s tax credit over the next 15 months. Tesla’s credits have already reached the end of the line.

GM lobbied vigorously for an extension but likely shot itself in the foot with the poorly-timed announcements of factory closures and large layoffs.

At the moment, the outlook for 2019 is fairly positive. Job growth is strong and unemployment is still at historic lows, giving consumers confidence to invest in new vehicles. Despite the continuing drama in Washington, there isn’t a lot of concern for the simple reason that progressive Democrats in the House will be obstructed by conservative Republicans in the Senate. What is a concern is the ongoing economic jockeying by certain world leaders. This introduces uncertainty not only for automakers, but for the large number of US businesses engaged in global commerce.

* indicates a sales record. Note: Monthly sales figures for General Motors are estimates. Full year figures are from GM. **Volkswagen Group figures include Audi, Porsche and Volkswagen brands Other includes estimated sales for Aston-Martin, Bentley, Ferrari, Lamborghini, Lotus, McLaren and Rolls-Royce

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