U.S. Auto Sales May Miss Magic Mark

In many ways, 2019 U.S. vehicle sales were like a marathon footrace. Some contestants breezed over the finish line, others gulped for air while at least one beat back skeptics…a little. 

That company would be Tesla Motors which said it produced almost 105-thousand electric vehicles, delivering about 112-thousand in December—a quarterly record for the EV-maker. For the year, Tesla delivered about 367,500 cars, 50% more than 2018.

Tesla’s other good news was reporting it has produced a tad under 1,000 cars at its Gigafactory in Shanghai, after breaking ground less than a year ago.

But Karl Brauer, executive editor of Kelley Blue Book and Autotrader tempers that news, saying, “A total of 367,000 vehicle deliveries in 2019 is noteworthy — a record for the company — but still well off the 500,000 rate Elon Musk predicted a couple years ago, and 112,000 deliveries in Q4 is well off the 500,000 “annualized production rate at the end of 2019” Musk called for last February. With that track record, we’ll see if the all-new Chinese plant can live up to the “5,000-a-week” rate Musk set as its goal.”

With one major automaker holding back their numbers until Monday, however, the final results for 2019 won’t be known until that straggler weighs in.

But with most every other company reporting, it’s not clear the sales volume for 2019 will come in over the magic 17 million mark considering the continuing erosion of passenger car popularity, challenging affordability issues and a 40-day labor strike.

Cox Automotive senior economist Charlie Chesbrough believes 17 million is “is within reach, but just barely. The shorter selling period this December, one less day than last year, coupled with the late Thanksgiving holiday, didn’t provide a lot of shopping days. In addition, it appears there was some pullback in fleet activity at the end of the year, particularly from Nissan which saw a steep and unexpected year-over-year decline in December. General Motors finished ahead of our full-year forecast, and we believe Ford beat our forecast as well, finishing the year down rough 3% vs 2018, better than our forecast drop of 3.4%.”

That long labor walkout at General Motors Corp., dragged down both its fourth quarter and full year results which were off 6.3% and 2.3% respectively. The company said the strike by UAW workers resulted in a 17% decline in sales of its newly launched heavy duty full-size pickups and impacted sales of other models as inventories dwindled.

“Our fourth-quarter stocks were leaner than we wanted, but as we get ready to launch our all-new full-size SUVs, we look forward to another solid year in 2020,” said Kurt McNeil, vice president, GM U.S. Sales Operations, in a statement.

There was no labor strife at Fiat Chrysler Automobiles but a paucity of passenger car sales wasn’t enough to offset record sales at the Ram truck brand, sending fourth quarter sales down 2% from the final three months of 2018. For all of 2019, sales were basically flat, off just 1% on the strength of Ram and Jeep brands.

“Our dealers did an outstanding job in 2019, not only with meeting consumer demand, but also handling the introduction of the redesigned Ram Heavy Duty and new Jeep Gladiator,” said Reid Bigland, Head of U.S. Sales, in a statement. “We have read the expectations that sales may slow a bit in 2020. However, we believe there is still plenty of demand in the market and we are ready for a new year.” 

Ford Motor Co. also reports sales only quarterly and plans to release those figures on Monday.

South Korean Hyundai Motor Company breezed into 2020 with a 9% boost in retail sales finishing kick in December. That was enough to put Hyundai on the plus-side for 2019, with a 3% increase over 2018. 

The new three-row Palisade helped Hyundai set a new record for annual SUV sales which spiked 20% over 2018, accounting for 53% of total sales—a point noted by Randy Parker, vice president National Sales, Hyundai Motor America. 

“We closed the year strong with retail sales increasing by 13% in the fourth quarter thanks to our now complete SUV lineup with seven different options for customers,” said Parker in a statement. 

The three biggest Japanese automakers had mixed luck during the decade’s final year, as they pivot their portfolios into richer SUV mixes from passenger cars.

For Toyota Motor Co, its Toyota brand finished the year down 7.2% for December and off 2.0% for all of 2019. Its luxury Lexus brand was basically flat off just 0.6% in December and down 0.1% for the full year. Those results were propped up by a 5.6% increase in Lexus SUV sales in 2019, marking the best year ever for the brand in that segment. 

Both divisions were also helped by strong hybrid sales which increased 26.3% for Toyota and 43.1% for Lexus. 

Nissan Motor Corp. had a rough 2019 all around recording a 9.9% sales decline from 2018, finishing with a 29.5% free fall in December. Neither cars nor trucks were moving as Nissan brand was off 28.4% in December, 8.7% for the year. The luxury Infiniti brand  had an even rougher ride with a 37.8% decline in December, capping off a year where sales fell 21.1% from 2018. 

Honda Motors Co. managed to make some hay from passenger cars with a slight 0.2% increase over 2018 for both its Honda and Acura brands combined, despite a 12% drop in December. 

Henio Arcangeli Jr., senior vice president of the American Honda Automobile Division noted, “Honda also bucked industry trends by achieving a second straight year as the retail number one passenger car brand in America, so we head into 2020 with strong momentum.” 

Affordability continues to be a challenge for many consumers as more non-luxury automakers abandon the passenger car segment, in favor of big ticket and high profit SUVs and pickup trucks. 

The estimated average transaction price in December was $38,948, up almost 2% from the same month a year ago according to Kelley Blue Book, although, as demand slowed last month automakers attempted to mitigate high sticker prices by putting more money on the hoods of new vehicles. Dealer discounts approached 7% of MSRPs in December, the highest since July, 2009. 

But even deep discounting may not have been enough to give U.S. auto sales enough strength to finish the 2019 marathon above that magic 17 million mark and this year’s not looking any better according to Kelley Blue Book analyst Tim Fleming who predicted,”With sales expected to be down in 2020, anticipate the pressure to continue on new-car prices and incentives.”