Higher auto prices may be contributing to the slowdown in U.S. auto sales
Ford Motor, General Motors and Toyota Motor posted deeper U.S. sales declines than analysts projected, raising the prospect of a fourth consecutive month of shrinking demand.
Ford car and light truck deliveries fell 7.1% last month, while GM’s dropped 5.8% and Toyota’s decreased 4.4%. All three companies reported slumping sales for passenger cars including the Ford Fusion, Chevrolet Malibu and Toyota Prius sedans.
Higher auto prices may be contributing to the slowdown in U.S. auto sales. The average new-car price in the U.S. rose about 2% over the past year, according to data from TrueCar Inc.’s ALG. That’s an increase more consumers may have been able to handle when borrowing costs were low and loose credit made pricier trucks and sport utility vehicles more attainable.
Analysts had projected the annualized pace of U.S. auto sales, adjusted for seasonal trends, probably slowed in April to about 17.1 million, from 17.4 million a year earlier. Fiat Chrysler Automobiles NV and Honda Motor Co. were expected to report the biggest sales declines, with both seen reporting decreases of more than 5%.
Industrywide deliveries have declined in each of the first three months this year and were down 1.5% through March, according to researcher Autodata Corp. Should the slump continue through April, it would reinforce estimates for the U.S. auto market’s first annual contraction since 2009, the year GM and Chrysler reorganized in bankruptcy court.
In an effort to keep new vehicles moving off the lots, automakers have ratcheted up discounting. Spending on incentives last month through April 16 reached a record for the month of $3,499, according to J.D. Power.
“We’re starting to see the slowdown in 2017 we’ve been anticipating,” said Jessica Caldwell, executive director of industry analysis for car-shopping website Edmunds.com. “These year-over-year declines may become more typical as the year progresses.”