Short September Stunts U.S. Vehicle Sales Ahead Of Challenging Q4

When it comes to September new vehicle sales in the U.S. file it under “Yeah…but.” A quirk in the calendar gave the Labor Day weekend to August, while depriving September of a lucrative selling period and one entire weekend of opportunity. Toss in the start of a labor walkout at General Motors Corp. in the middle of the month halting production, the specter of impeachment hearings and a growing affordability issue for consumers and the September song from both foreign and domestic automakers, as well as analysts, is one dissonant tune that’s likely to play through the end of the year.  

“As we look ahead, we’re really looking at what could be a very difficult quarter in so many ways, in the broader economy, from the geopolitical perspective, from a simple U.S. politics perspective,” predicted Jonathan Smoke, Chief Economist at Cox Automotive during a conference call with the media last week. 

The first challenge is the apples/oranges comparison between the Detroit 3 automakers and the imports. 

GM, Ford Motor Co., and Fiat Chrysler Automobiles now only report sales quarterly rather than monthly. They did so Wednesday, a day behind the imports, which continue to release monthly results.

GM third quarter sales were up 6.3% on the strength of gains for its Buick brand and Chevrolet Silverado and GMC Sierra pickup trucks. But since members of the UAW walked off their jobs at GM plants on Sept. 16 when the two sides failed to come to a labor contract agreement the automaker’s stockpile of inventory of its most profitable products, namely pickup trucks, could come under duress as production at a pickup truck plant in Mexico halted due to lack of parts.

For the short-term, inventories appear to sufficient, according to an analysis by George Augustaitis, Director of Industry Analytics at CarGurus.com, who writes “If the UAW strike ends before the start of November, General Motors and suppliers’ plants should be up and running and replenishing inventory prior to the holiday sales event season.” 

If the strike lingers past then, Augustaitis predicts even a healthy 85-days supply of the profitable and popular Chevrolet Silverado, some of which are built at the paused plant in Mexico, could dwindle just as the holiday selling season takes hold. 

Autotrader executive analyst Michelle Krebs adds, “Dwindling inventory comes at a time of year when pickup truck sales are strong, and at a time when GM is in launch mode with its full array of trucks. This will put the Chevrolet Silverado even further behind the popular Ram in sales. Most importantly, fewer pickup truck sales will impact Q3 and now Q4 profits at GM since pickup trucks account for the bulk of the income.”

FCA’s Q3 sales were flat with the July-September period a year ago but reported record quarters for the Jeep Wrangler and Ram pickup trucks. In a bit of an anomaly, Dodge muscle cars bucked the trend away from passenger cars with Challenger and Charger reporting third quarter boosts of 24% and 46% respectively.

Ford reported a 4.9% increase in Q3 sales as the company transforms its portfolio. 

“It’s a number we’re OK with,” said Mark LaNeve, Ford Vice President Marketing, Sales and Service in a conference call with industry analysts and reporters. “This year was a really a transition year as we dramatically made that move out of cars …and into an all new line of SUVs.” 

He’s also OK, at least publicly, with the 6% decline in third quarter sales for the company’s cash cow F-Series pickup truck line. For the year, F-Series is off 2.4%.

“With the launch of Ranger we knew there would be some effect on F-Series,” said LaNeve. “We feel good about where we are with F-Series.”

On Tuesday, the imports, with a few exceptions, reported negative results in September, all blaming, in part, the shorter September selling period. 

The major surprise was the end of Subaru of America’s long streak of consecutive monthly sales gains. The automaker was down 9.4% last month and its top U.S. executive had an explanation. “Due to the rapid sell-down of the last generation Legacy and Outback models, our yearly, month-over-month sales streak of 93 consecutive months came to an end in September,” said

Thomas J. Doll, President and CEO, Subaru of America, Inc. in a release. “We look forward to robust sales in October and are on target to achieve our 700,000-vehicle sales goal for 2019, marking 12 consecutive years of sales increases.”

Among other imports, Toyota Motor Sales USA was down 16.5% in September with the Toyota division off 15.5% and Lexus down 23.3%. Within those results, however, the company’s hybrid vehicles showed gains.

“Led by a 51% increase in hybrid sales growth over the past three months, we’re doubling down and accelerating our pace,” said Jack Hollis, group vice president and general manager, Toyota division, in a statement. 

At Nissan North America the numbers weren’t kind last month. Nissan was down a total of 17.6% while the Nissan brand was off 4.6% and Infiniti fell 43.9%.

At American Honda, the company was down 14.1% in September with the Honda brand was down 13.7% and Acura down 17.9%.

Hyundai Motor America fell 9% last month while Volkswagen of America dropped 12%. 

“Our SUV sales continue to drive our growth,” said Werner Eichhorn, chief sales and marketing officer, VW North American Region. “We expect the start of production on the redesigned Passat to give our sedan sales a boost, and along with the upcoming Cross Sport, set us up for success in 2020.”

 Mercedes-Benz USA was up 4.8% and BMW USA sales were 6% higher than during September, 2018. 

While the automakers are expressing confidence the year will finish strong, there’s no denying the challenges they face that include the lingering labor strike at GM, the Damocles Sword of possible import tariffs and reactions from targeting countries, the possibility of Pres. Donald Trump facing impeachment and consumer financial fatigue as the cost of new vehicles continues to escalate.

“We’re well below the strong growth rates we had during the early days of the market recovery and this is suggesting this affordability issue is really starting to eat away at consumers and they just aren’t able to keep up with the market,” said Charlie Chesbrough, Senior Economist at Cox Automotive. 

As CarGurus.com’s George Augustaitis points out, on top of all that, the automakers will have less time to end the year with big holiday promotions as Thanksgiving falls in the year’s 48th week—a week later then it did in 2013, 2014 and 2015.