What Do Q3 Auto Sales and Transaction Prices Suggest About Earnings?

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Automakers report U.S. sales volume right around the first of every month (or quarter), so when earnings season rolls around, analysts and investors have a pretty good idea of what they’re going to hear.

The analysts at Cox Automotive have looked at the sales data as well as pricing and incentive spending for the Detroit Three automakers — Ford Motor Co. (NYSE: F), General Motors Co. (NYSE: GM) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU) — as well as the leading import maker, Toyota Motor Corp. (NYSE: TM), and everyone’s favorite carmaker, Tesla Inc. (NASDAQ: TSLA).

Ford and Tesla are reporting third-quarter results after markets close Wednesday, while reports from FCA and GM are due out next week.

First, a look at the Cox data on Ford. Third-quarter 2018 brand sales are down 3.6% for Ford and 5.2% for Lincoln compared to the third quarter of 2017. Total sales dropped 3.7%. Market share is absolutely flat, with Ford at 13.7% and Lincoln at 0.6%. Transaction prices rose 3.5% for Ford and 11.8% for Lincoln, and incentive spending rose 8.6% to $4,615 per Ford vehicle and fell 8.7% to $6,875 on Lincoln vehicles.

Ford’s best-selling F-Series trucks posted a 0.4% dip in third-quarter sales, while the transaction price rose by 1.7%. Ford sold 227,880 F-Series trucks in the quarter for an average price of $49,533.

Tesla’s third-quarter numbers were lifted by 54,300 sales of the company’s Model 3. Sales of the Model S dipped 11.0% to 7,575, and sales of the Model X rose 32.0% to 8,050. Tesla’s U.S. market share in the third quarter reached 1.6%, a sharp increase from a share of 0.3% in the year-ago quarter. Cox did not provide transaction price information.

GM sales were down 11.1% year over year in the third quarter, led by Chevy brand sales down 11.5%, GMC brand sales down 11.3%, Cadillac brand sales down 10.7% and Buick down 7.3%. GM’s market share of 16.3% was down from 17.7% a year ago, with Chevy brand share down the most at 1%.

Companywide transaction prices rose 4.5% year over year, with Cadillac prices rising 5.1% and Chevy prices up 4.8%. Transaction prices rose 10.1% on the Chevy Traverse to $40,968 and 5.0% on the Silverado pickup to $46,803. The GMC Sierra pickup got a 5.2% boost in transaction pricing to $52,888.

Incentive spending on Cadillac rose by 14.3% in the quarter, while the company’s other three brands saw incentive spending drop. Incentive fell the most on Buick, down 11.3%.

FCA was the only one of the Detroit Three to post a volume increase year over year in the third quarter. Total sales rose 10.3% to 564,507 units, led by Jeep sales of 251,172, up 16.3%, and Ram brand sales of 156,320, up 12.4%. FCA’s U.S. market share rose 1.7% year over year to 13.3% in the quarter. Jeep Cherokee model sales rose a whopping 81.1% to 66,024 units in the quarter, and Jeep Compass sales jumped 60.2% to 45,164.

Transaction prices rose 3.0% for Ram brand trucks to an average of $47,160. The average transaction price for a Ram pickup rose 2.5% to $48,520. The average transaction price for a Jeep Wrangler rose by 8.9% to $40,820 and unit sales jumped 12.2% to 57,459.

FCA’s average incentive spend per vehicle rose 1.9% to $4,567. Jeep incentives rose 13.3% to $3,623 while Dodge/Ram incentives dropped 4.9%.

Automakers’ stocks are trading very close to 52-week lows, and of the five we’ve looked at here, only Tesla is trading in the green today. Short seller Citron Research has backed off its call on the stock, boosting the shares by more than 5.5%.

Given the weaker sales, expectations have been set pretty low for third-quarter results at both Ford and GM. Even at FCA, where quarterly sales were strong, analysts are waiting for some indisputable good news. Any sign of weakness on any metric will hammer these stocks following their earnings reports. That’s just this week’s new normal. As for Tesla, its stock is in a league of its own.

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