Auto Sales Forecast to Fall in April, Though Higher Profits May Cushion the Blow

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Most automakers will be reporting April sales next Thursday and the news is not expected to be very good. A combination of higher interest rates on vehicle loans, higher prices and lower manufacturer incentives is forecast to yield a seasonally adjusted annual rate (SAAR) of sales of 16.9 million units.

Analysts at Cox Automotive see April sales of 1.37 million units, up 1% compared with April 2018. There were two additional selling days this year, which contributes both to the monthly increase and the decrease in SAAR from 17.2 million units sold last year in April.

J.D. Power and LMC Automotive analysts have also forecast a SAAR of 16.9 million vehicles for April, with retail sales dipping from 1.06 million last year to 1.04 million units this year. Last month, retail sales reached nearly 1.2 million units.

Thomas King, senior vice president of data and analytics at J.D. Power, noted that lower sales volume at the low end of the market “poses a smaller threat to [automakers] profitability” than the headline numbers suggest. That’s due to a sharp increase in prices. The average new car sales price for April is tabbed at $33,695, the highest ever for the month, and up $1,235 (4%) year over year. At the same time, incentive spending is down by nearly $300 per vehicle to $3,408.

The following table from Cox shows the unit sales forecast for April, compared to April 2018 and March 2019, the percentage change month over month and year over year, as well as the automaker’s U.S. market share. Totals for Ford and GM are estimated because the companies no longer report monthly sales.

Brand April 2019 April 2018 March 2019 YOY MOM Share
GM 235,000 237,552 284,000 −1.10% −17.20% 17.2%
Ford 190,000 203,856 230,000 −6.80% −17.50% 13.9%
Toyota 190,000 192,353 214,947 −1.20% −11.60% 13.9%
FCA 180,000 184,149 200,307 −2.30% −10.10% 13.1%
Honda 125,000 125,701 148,509 -0.60% −15.80% 9.1%
Nissan 105,000 87,764 150,768 19.60% −30.40% 7.7%
Hyundai Kia 105,000 106,648 118,441 −1.50% −11.30% 7.7%
Volkswagen 54,000 53,468 62,173 1.00% −13.10% 3.9%
Subaru 54,000 53,170 61,601 1.60% −12.30% 3.9%
Grand Total 1,370,000 1,355,860 1,621,551 1.00% −15.50%

Note: GM and Ford monthly sales are estimated. Totals include brands not shown.

When GM reported first-quarter sales earlier this month, the company posted a decline of 7% year over year, although the average sales price was up by $8,040 per vehicle.

Ford’s reported a 1.6% first-quarter drop in sales with passenger car sales down 23.7% in the quarter, while truck sales rose by 4.1% and sport utility vehicle sales rose 5%. The average selling price for the company’s F-150 pickups was $47,454.

When Ford reported first-quarter results after markets closed Thursday, the company handily beat consensus estimates for both earnings per share and revenues, even though revenue was down by $1.6 billion year over year.

The relative strength of sales so far in 2019 is not expected to hold for the full year. Jeff Schuster, president of J.D. Power’s Americas operations and global vehicle forecasts, expects a 2.2% year-over-year decline in total sales to 16.9 million units in 2019. He also noted that many new models remain to be unveiled this year while offering this caveat: “However, given the lack of topline growth this year, electrification and automated vehicle technology will continue to be key focus areas for capital investment.”

In that vein, earlier this week Ford announced a $500 million investment in electric truck maker Rivian Automotive. The investment is over and above the $11 billion Ford plans to spend on developing mobility alternatives.

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