Fresh on the heels of of a much weaker than expected ISM reading that caught economists by surprise comes news that motor vehicle sales for August are not living up to expectations.
Is this is just another anomaly, sure to go away?
Last month domestic auto sales hit 14.3 million. We will not have final sales until later today but Econoday sees things this way as of now.
“The bulk of August’s sales data is out and vehicle sales are running below July, roughly in the low 13 million annualized area for North American-made models vs 14.3 million in July. Though sales levels remain solid, the decline from July points to trouble for the August retail sales report. Final sales totals will be posted at day’s end.”
Ford Misses Estimates
The Street Insider reports Ford Motor (F) U.S. Light-Vehicle Sales Fell 8.8% in August, Missing Estimates.
Lincoln sales rose 7 percent in the U.S. in August versus a year ago with 9,243 vehicles sold, while Ford Motor Company vans reached best-ever August sales with 20,355 vehicles sold. Overall U.S. company sales totaled 214,482 vehicles, an 8 percent decline.
Retail sales totaled 168,543 vehicles for the month – an 8 percent decrease. Fleet sales of 45,939 vehicles, including daily rental, commercial and government segments, were down 10 percent.
Total truck sales were down 2 percent, with 88,372 vehicles sold. Ford F-Series sales of 66,946 trucks mark a 6 percent decline – and F-Series’ best retail month of the year.
Record Year Not Expected
Fortune reports GM, Ford Expect Auto Sales Won’t Match Record 2015.
U.S. auto sales fell in August prompting some major automakers on Thursday to forecast that a long-expected sales decline has begun or, at best, industry sales have hit a plateau that could spark a shift to juicer customer incentives, slowed production, or more fleet sales.
General Motors Co said August U.S. sales fell 5.2 percent to 256,429 vehicles, and Ford Motor Co sold 214,482 vehicles in the month, down 8.4 percent. Both were in line with analysts’ expectations.
Ford Chief Economist Bryan Bezold said sales have hit a plateau after steadily rising following the 2008-2009 recession.
Diving Further Into the ISM “Anomaly”
Earlier today I noted ISM Dips Into Negative Territory; It’s “An Anomaly, Just a Pause”.
Second Anomaly Sighting
It appears auto sales are a second “anomaly”.
A few moments ago, Pater Tenebrarum at the Acting Man Blog pinged me with a chart he posted on August 8 in US Economy – Something is Not Right.
The source of the chart is a mutual friend Michael Pollaro.
Today, I am pleased to report that Pater and I launched a new service, free of charge of course: It’s called “Anomaly Spotters Anonymous“.
We are both expecting more “anomalies”. Stay tuned.
Mike “Mish” Shedlock
Trader Joe said:
New driver-less car demand is about to take off like wildfire, replacing all those non-driver-less cars is going to mean a whole bunch more sales.
Not a chance.
Last one out please turn off the lights.
Good night Irene.
I wonder if there is an undercurrent of demand for new vehicles that will never occur because we are waiting for “driverless transportation”? I have two 13 year old cars and have decided to repair them rather then buy a new car because I am waiting for a “driverless car”. When “driverless cars” become available in the next few years, any new car bought recently will become worthless as a used dumb car!
Trader Joe said:
BTW – the “sales plateau” ain’t the half of it.
Just wait until all the financed junk comes back on the used market as leases expire, and repo’s increase.
Oh, and defaults on loans….and loan backed paper….and CDS…and on, and on, and on…
Yup… I did that for 35 years and I can confidently tell you that nobody at the top fucked up the sales projections and the production schedule… they will push the blame down until it becomes Chrystal Clear that they were robbing future sales with incentives. I’ve already gotten word months ago that there were OT cuts, then shift curtailments and now they are going to be looking at layoffs as the next measure. It never changes, it’s always the same-ol’-thing. 2014 total sales were around 18.5 million, 2015 was around 18.0 million, and the handwriting was on the wall the whole time.
One big caveat here… When FCA reports “sales”, it really means that the vehicle is now in the possession of the dealership. How do the other companies report sales? At least for FCA, it may only mean that the dealer lots are full of cars that will be hard for them to move in a slowing economy.
The cost of maintaining these vehicles will result in a massive used car shortage, immobilizing the would be working poor
Tony Bennett said:
Ford kind of gave a heads up with Q2 earnings release:
“We delivered another strong quarter
– one of our best second quarters
ever – and record pre-tax profits for
the first half of this year. We remain
committed to delivering another full
year of strong profitability, even as we
address some new risks and market
challenges around the world.”
Mark Fields, President & CEO
Tony Bennett said:
GM’s dealer inventory went from 66 days (682,170 vehicles) end of July to 74 days (728,213 vehicles) end of August.
Compare to last year – end of July 64 days (665,663 vehicles) to 63 days (655,776 vehicles) end of August.
Ford’s dealer inventory ballooned from 62 days last August to 81 days this year.
All this prying and spying is going to be the death of many people…if it hasnt already.
I always found Ford’s stance of “what goes on in the car stays in the car” a sound business decision…but business moves on as they say. I would imagine the industry fought this tooth and nail though.
The irony of course is …. if you have an autonomous vehicle already what’s the prying and spying about?
My first and only thought is “to commit murder” basically.
Sad thought I must say.
Wish I could be dissuaded of it by all those “true believers in autonomous driving.”
Bankers printed too much vehicle inflation. People can’t afford the product anymore. They switched to leasing for awhile, but even that is not working anymore. Inflation to the moon.
Ford announced 0% financing for 72 months a few days ago. GM did the same today, It is the race to the bottom.
There’s loans out there are running 96 months… cars loans that are twice it”s lifetime. Rile ofbthumb back in the 80s were 3 years with a substantial down payment. Today, the use the unsuspecting bond holder as the substitute for a down payment and the owner has no skin in the game.
Old Guy said:
Greg I agree this is indeed crazy but people will gladly step up and finance a vehicle 5 years after the warranty period. Many people just lease now.
The problem is many will never pay them off once a major problem happens to the vehicle after the warranty period has expired. Of course we are not mentioning the extended warranties dealers are selling with the vehicles. Many will simply not pay for the vehicle once an expensive problem happens.
The recent GM commercial about the ford F150 and its aluminum bed with the tool box is also a joke, you see all trucks are going to switch over to the aluminum because they must meet the new EPA standards and Ford was the first. The government needs to get out of the MPG for vehicles. Why? All it does is cause us to pay more for vehicles and their repairs. Aluminum is an expensive repair. Most higher end foreign sports cars have used aluminum for decades all the way back into the late seventies until present.
People need to remember that the sale of the vehicle is counted once it ships to the dealer not when the dealer sales the vehicle. I definitely would not buy a Chrysler/Jeep/Dodge product and finance it for that period. They are known for having quality problems and it is ashamed as the Dodge pick up is well appointed and uses a different suspension system as the other makers. Their interiors are well appointed but reliability problems still plagues the company.
I pay cash for my vehicles. Getting to the point where they cost as much or more then my first home. I just save what is needed and then buy. The sad part is these days cash no longer talks. To get incentives and other discounts you must finance.
My best advice to all is buy used, from a reputable dealer. Let someone else eat the price deflation once they drive it off the lot.
With the waves of poorly engineered cars these day sonce w004, i am considering a lease this time. I saw too much being at engineering. Im considering building a second car fo me from scratch to replace my Jeep. A very special broad purpose utility vehicle.
Almost seems unbelievable that a country of 300 million can absorb that many new vehicles year after year after year.
Bob M. said:
When ALL you make is 4 & 6-banger econo-shiiteboxes, you can EXPECT your sales to… “plateau”…