The U.S. may be the lone bright spot in an otherwise sluggish global economy as American consumers continue to buy expensive new vehicles at record levels.
The U.S. industry sold 1.51 million cars and light trucks in April, according to researcher Autodata Corp. That broke an 11-year-old record, according to Edmunds.com. Sales skewed toward more expensive sport utility vehicles and pickups, a sign that consumers are confident enough to make big
April’s results show a rebound from the first quarter, when sales were at historically high levels but showed slowing growth. The next few months of auto sales will show whether the U.S. economy has staying power, especially if consumers maintain buying momentum.
“It’s a very nice rebound from the softness we saw in March,” said Jeff Schuster, senior vice president with LMC Automotive in Troy, Michigan. “The U.S. economy is set up pretty well to weather the global slowdown. The next several months will be the real test.”
Investors may need more evidence of strength before betting on the auto industry. Despite the strong month, General Motors Co. shares fell 1.6 percent to $31.25, Ford Motor Co. was down 1.4 percent to $13.43 and Fiat Chrysler Automobiles NV was off 3.1 percent to $7.96 at the close in New York. Auto stocks fell during a broad market selloff that saw the Dow Jones Industrial Average and Standard & Poor’s 500 Index both fall almost 1 percent.
Some automakers are more cautious in their optimism. Nissan Motor Co. spent 12 percent more on sales incentives than it did a year ago, with an average cost of $3,300. Some of that was done to clear out lingering 2015 model cars, but the company isn’t convinced that good times are here to stay, said Judy Wheeler, vice president of sales for Nissan’s U.S. business.
“The market is not quite as robust as it was last year, and that’s what you’re starting to see,’’ Wheeler said. “But it will still be fairly strong.’’
The strong month came even as most automakers pulled back on rebates and incentive deals. GM said that carmakers discounted vehicles by about 10 percent of average transaction prices. In the first quarter, the average amounted to 11 percent of the average sale price, Schuster said.
FCA said on Tuesday that its U.S. sales rose 5.6 percent in April, beating analysts’ estimates and extending its streak of monthly gains to more than six years — thanks to the popularity of Jeep SUVs and Ram pickups. Nissan, Toyota Motor Corp. and Honda Motor Co. also beat estimates, while Ford and GM missed lofty expectations.
FCA’s sales reached 199,631 cars and light trucks, the automaker said in a statement. That easily beat analysts’ estimates of 4.3 percent growth. Jeep sales, which boosted the carmaker’s first-quarter profit, jumped 17 percent from a year earlier, as Compass and Renegade more than doubled. The Ram truck brand gained 12 percent to 45,810.
“Consumer preference for SUVs and pickup trucks continued unabated in April and helped to propel us to our strongest April sales in 11 years,” Reid Bigland, head of U.S. sales for FCA, said in the statement. The company has been increasing production of SUVs and pickups to meet consumer demand.
Even as consumers slowed new-vehicle purchases in March, a strong labor market, available credit and relatively cheap gasoline will fuel 17.8 million in new car and light truck deliveries in 2016, beating last year’s record, according to a Bloomberg survey.
“There was a little bit of nail-biting in terms of what March was and what it meant going forward,” said Kevin Tynan, an auto-industry analyst with Bloomberg Intelligence. “April was important.”
Nissan and Honda were projected to be the biggest gainer among the top automakers and they didn’t disappoint. Nissan sales rose 13 percent, topping the 11 percent average estimate. Nissan brand light-truck sales rose 10 percent to an April record, and the brand set an April record for cars, too, with Sentra up 12 percent and Altima up 29 percent. Honda sales rose 14 percent, beating the average estimate for a 10 percent increase.
Toyota’s U.S. sales rose 3.8 percent in April compared with the year-ago period, slightly beating estimates. That included a 5 percent increase at the company’s Toyota division, which sold 186,243 cars and trucks in April. At Toyota’s Lexus luxury division, sales dropped 3.8 percent.
Ford’s light-vehicle sales rose 3.6 percent, shy of the average estimate for a 3.8 percent increase, according to Bloomberg. Sales of the F-Series pickup line rose 13 percent and SUV sales also jumped 7.7 percent. The Dearborn, Michigan automaker’s 231,316 total deliveries, including heavy trucks, marked its best April for retail sales in 10 years.
In another sign that consumers are buying expensive vehicles, sales for the Ford Explorer rose 22 percent. The SUV starts at more than $31,000 and can reach well over $50,000.
GM, the only U.S. automaker projected to report a decline, fell more than analysts had projected as sales dropped 3.5 percent, compared with the average estimate of a 1.7 percent drop. All four of GM’s brands were down for the month. The Detroit automaker said it has pulled back on low-margin sales to rental fleet customers and focused on selling more expensive cars to retail buyers, where it reported a 3.3 percent increase.
For the whole industry, the annualized selling rate, adjusted for seasonal trends, rose to 17.4 million, just shy of the average projection for a 17.5 million pace.