Ford sales slide surprises as GM, Nissan, Honda gains all miss
By Bloomberg
Ford Motor Co.’s light-vehicle sales slipped 2 percent while other top automakers reported smaller gains than analysts had estimated as cold weather slowed showroom traffic.
Ford, which was projected to report a 5.8 percent increase in sales, said deliveries of F-Series pickups, Escape sport- utility vehicles and Fusion family cars all declined last month. General Motors Co.’s sales rose 4.2 percent, as sales of light trucks rose and sedans fell, missing estimates for a 5.9 percent increase.
Frigid winter conditions kept car buyers home toward the end of the month, limiting growth as the reviving economy, a collapse in fuel prices and long-term, low-interest loans have all contributed to the longest upswing in U.S. auto sales since World War II. GM and Fiat Chrysler Automobiles NV both projected less acceleration in the month’s sales pace than analysts did in a survey last week before additional bad weather rolled through.
“It’s hard to believe weather wasn’t a factor,” Michelle Krebs, senior analyst at AutoTrader.com, said in an interview. “The Northeast is a huge small-utility market, so that had to have some impact. I’m not worried that they’re off a couple of percentage points. They’ll probably make it up in March and April.”
Last month was one of the coldest Februaries on record for many Midwest and Northeast cities, including Chicago, New York and Boston, according to Weather.com. Toyota Motor Corp., FCA, Honda Motor Co. and Nissan Motor Co. deliveries all reported deliveries that increased less than analysts had estimated.
Annualized Rate
The annualized selling rate, adjusted for seasonal trends, rose to 16.2 million cars and light trucks, from a 15.4 million pace a year earlier, according to Autodata Corp. That was the slowest selling pace since April, according to the Woodcliff Lake, New Jersey-based researcher, and it was short of the average analyst estimate of 16.6 million.
Light-vehicle sales rose 5.3 percent to 1.26 million, Autodata said. Analysts had estimated that sales would reach 1.29 million.
The miss shouldn’t cause too much concern, Erich Merkle, Ford’s sales analyst, said today on a conference call with reporters and analysts.
“We go through this every year,” he said. “We look at January and February and we think that’s the way the rest of the year is going to play out. But keep in mind they are very weak months. I think it’s really hard to hang any hats at this point on January and February.”
Company Results
Deliveries by Fiat Chrysler’s Jeep line of sport-utility vehicles rose 21 percent while Dodge skidded 15 percent. FCA’s total sales for the month rose 5.6 percent, compared with the average analyst estimate for an 8.9 percent gain. The Auburn Hills, Michigan-based unit has now reported rising sales for 59 consecutive months.
Sales by Nissan’s namesake brand rose 1.1 percent to a record for the month, even as Altima sedan sales slid 7.7 percent. Including a 20 percent rise in sales of Infiniti luxury models, the Yokohama, Japan-based automaker’s sales rose 2.7 percent, less than the 3.8 percent that analysts had estimated.
Toyota reported the biggest gain among top automakers with a 13 percent increase. That also fell short of estimates, which were for a 15 percent jump. Honda sales rose 5 percent, missing analysts’ estimates for an 11 percent improvement.
GM, the largest U.S. automaker, said its Buick and Cadillac brands showed declines in sales. Deliveries at its luxury Cadillac division fell 13 percent with only its Escalade full- sized SUV posting an increase. For Buick, only its Encore SUV rose in sales. All passenger cars for the two upscale brands fell in the month.
Ford’s Fall
Sales of Ford’s top selling F-Series pickup line fell 1.2 percent last month, as the automaker continues to crank up production of the new aluminum-bodied version of the F-150. Output of that model will expand to a second factory this month, Ford said. Sales climbed 32 percent for Ford’s full-size Explorer SUV, its best February in nine years. Deliveries of the Escape compact SUV fell 9.6 percent and the Ford Fusion family sedan dropped 4.9 percent.
More than half of auto sales are being financed with loans of six years or longer, according to Experian. Longer loans reduce monthly payments, making it easier for consumers to justify buying vehicles that have become increasingly pricey as automakers stuff them with gadgetry.
Before the recession, automakers used multiyear, low- interest loans as a form of incentive to sell cars people wouldn’t otherwise buy. Now they’re dangling low monthly payments to help mitigate sticker shock.
“People don’t feel like they’re paying more for their vehicles,” said Mark Wakefield, managing director and head of the automotive practice at consultant AlixPartners in Southfield, Michigan.
The month’s disappointing results don’t indicate a real slowdown, said Wakefield. AlixPartners projects the next downturn will likely be in 2017 to 2019, he said. Gasoline prices, which are still $1 a gallon less than last year at this time, are freeing up about $135 billion in cash to be spent elsewhere, Wakefield said.
“People are feeling good about the economy and some of this money is going to go to buy new cars,” he said. “All signs are green.”