GM posts 4.8% Q4 gain; light trucks lift Toyota, Hyundai, VW brand, Mazda

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General Motors, Toyota Motor Corp., Volkswagen Group, Subaru, Kia and Mazda chalked up fourth-quarter U.S. sales increases, signaling a further recovery for the industry to end a pandemic-wracked year.

GM’s sales improved 4.8 percent from a year earlier, as three of its four brands advanced. Toyota Motor was up 9.4 percent for the quarter, thanks to a 20 percent December gain in a month that was aided by three extra selling days.

The final days of December appear to have been more robust than forecast, with several automakers citing unexpectely strong retail activity over the holidays.

“There was also no shortage of positive news in the last week of December, and that may have encouraged consumers and lifted sales – passage of the stimulus package, more certainty around the election outcome, coupled with a lot of vaccine news,” said Charlie Chesbrough, senior economist at Cox Automotive. “That may have been enough to drive a surge at the end of the month, a surge that surprised even us.”

FCA US finished the fourth quarter with an 8 percent decline, reflecting lower fleet shipments, with volume off 4 percent at Jeep, 5 percent at Ram, 31 percent at Dodge and 58 percent at Fiat. Only the Chrysler brand, up 5 percent, and Alfa Romeo, up, 23 percent, finished the quarter with gains. Still, the automaker said fourth-quarter retail sales rose 1 percent behind Jeep, Ram and Alfa Romeo volume.

A December surge made Mazda one of the few brands to show a gain for the year.

Hyundai’s fourth monthly increase in the last half of 2020 wasn’t enough to avoid a fourth-quarter decline. And Nissan Group continued to struggle amid a wrenching shift in strategy.

“GM outperformed the industry in the quarter and the full year by a significant margin because our manufacturing and supply chain teams and dealers helped keep people safe at work and our launches on track,” Steve Carlisle, president of GM North America, said in a statement.

Most automakers will report final figures for 2020 on Tuesday, capping a year largely salvaged by a steady second-half rebound. Ford Motor Co. is scheduled to release results on Wednesday followed by Mercedes-Benz on Friday.

The light-vehicle market, down 18 percent through September, continued to rebound in December and the fourth quarter from the lows of the second quarter. After five straight years of sales above 17 million, the seasonally adjusted sales rate plunged to 8.74 million in April as the pandemic gripped America and auto factories were idled. 

Consumer demand remains strong despite a late-year surge of coronavirus cases, analysts say.

Company by company

For the year, sales at GM fell 12 percent to 2.5 million. Deliveries to individual customers – not including fleets – declined 6 percent for the year.

Buoyed by new or redesigned light trucks, fourth-quarter volume rose 4.6 percent at Chevrolet, 10 percent at GMC and 5.8 percent at Cadillac. Buick deliveries slipped 10 percent during the quarter.

At Toyota, volume last month jumped 23 percent at the Toyota division and 8.2 percent at Lexus.

American Honda’s December sales slid 0.1 percent while fourth-quarter demand dropped 8.9 percent, reflecting weaker car deliveries.

Fourth-quarter volume skidded 19 percent at Nissan Motor Co., with sales off 18 percent at the Nissan brand and 31 percent at Infiniti, as the company struggles with an aging product lineup and dials back on incentives and fleet business. For the year, Nissan Motor Group volume dropped 33 percent to 899,217, the biggest decline on record.

Hyundai’s U.S. sales rose 2 percent to 66,278 in December, behind a 12 percent jump in retail volume. The gain came as the company dialed back on fourth-quarter incentives. For the year, Hyundai volume dropped 9.7 percent.

Hyundai said retail deliveries totaled 57,777 in December, with an expanded crossover lineup representing 70 percent of retail mix. Fleet shipments dropped 34 percent. At Kia, volume rose 4.9 percent in December and 4 percent during the fourth quarter, but slipped 4.8 percent for the year.

Sales rose 0.3 percent at Subaru in the fourth quarter, helped by a 2 percent gain in December, though the brand finished the year down 13 percent, a rare decline.

The Volkswagen brand, benefiting from a 22 percent increase in crossover sales, finished the fourth quarter with an 11 percent increase, and finished down 10 percent for all of 2020.

Mazda volume last month soared 18 percent, helping the company to an overall gain of 0.2 percent for the year.

Among other luxury brands, fourth-quarter volume fell 2 percent at BMW but rose 19 percent at Volvo, capping a 1.8 percent annual increase for the Swedish automaker.

Holiday deals

Year-end and holiday sales promotions were widespread again, though average incentives were down from December 2019. Some automakers dangled deferred payments up to five months on a new-vehicle purchase.

Analysts at Cox Automotive, J.D. Power, TrueCar and Edmunds expect 2020 sales to come in at 14.4 million to 14.6 million, down about 15 percent from 2019. That would mark the lowest tally since 14.49 million in 2012, when the economy was still recovering from the 2008-09 financial crisis.

Analysts call the second-half recovery remarkable given how quickly the virus upended the industry in the spring, dealing a devastating blow to the U.S. economy and job market.  

“Supply constraints likely prevented even better volume performance, but most manufacturers and dealers enjoyed improved profitability as a result of limited supply and robust demand,” said Cox Automotive Chief Economist Jonathan Smoke.

“We enter 2021 still battling the COVID-19 pandemic, but the distribution of vaccines gives us confidence that the economy and the auto market will both see continued progress once we get through the winter.”

Fleet deliveries remain the biggest drag on volume and are not expected to begin recovering until the second half of the year, some analysts say.

The drop in fleet business has been offset favorably by rising transaction prices and a richer product mix fueled by pickups, crossovers and SUVs. Average transaction prices are expected to reach another all-time high, rising to $38,077 in December, a 9 percent increase from a year earlier, J.D. Power estimates. Trucks, crossovers and SUVs are on pace to account for 79 percent of retail sales last month, compared with 75 percent in December 2019.

SAAR outlook

The seasonally adjusted, annualized sales rate for December is expected to tally 15.5 million to 16.4 million, based on forecasts from Cox, J.D. Power and TrueCar. That would be down sharply from December 2019’s 17.11 million rate. The SAAR slid to 15.88 million in November after topping 16 million in September and October.

Incentives

The average new-vehicle incentive in December was tracking at $4,014, a decrease of $585 from a year earlier, J.D. Power said. The figure is now off 19 percent since peaking at $4,953 per unit in April. TrueCar estimates December incentives averaged $3,991, down 7.4 percent from December 2019. (See charts below)

Odds, ends

  • There were 28 selling days last month vs. 25 in December 2019.
  • The average number of days a new vehicle sat on a dealer lot in December before being sold was on pace to fall to 49 days, J.D. Power said, remaining below the 50-day threshold for the third straight month.
  • Four brands – Tesla, Volvo, Mazda and Alfa Romeo – generated higher U.S. sales in 2020.
  • Fleet sales were expected to total 218,700 last month, or roughly 14 percent of all light-vehicle volume, down from 19 percent in December 2019, J.D. Power said.
  • The average transaction price for a new vehicle surpassed the $40,000 mark for the first time in December, Edmunds estimates.

Quotable

“Luxury vehicle sales were an unexpected sales story for 2020, with higher-income Americans, some of whom were not as financially impacted by the pandemic, delivering strong luxury vehicle purchases this year. Brands such as Tesla, Volvo, and Alfa Romeo increased volume year-over-year, and even Lamborghini broke sales records in 2020.”

   — Nick Woolard, TrueCar analyst

“We look forward to an inflection point for the U.S. economy in spring. Widening vaccination rates and warmer weather should enable consumers and businesses to return to a more normal range of activities, lifting the job market, consumer sentiment and auto demand.”

   — General Motors Chief Economist Elaine Buckberg

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Saurabh Shukla

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