American automakers battered in February as US sales drop

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Chicago (AFP)

American automakers were battered as consumers pulled back on new car purchases in February, a continued hangover from the brisk sales pace last year, according to data released Thursday.

The three North American auto giants reported sales declines: 6.9 percent year-over-year for GM and Ford, and one percent at Fiat Chrysler's US subsidiary.

GM said the drop was in comparison to "an exceptionally strong February 2017," when the company enjoyed record sales of crossovers, large SUVs and pickups.

Analysts had predicted a decline, amid an increasing supply of lightly-used cars competing for consumers' spending, and rising interest rates. In addition, record sales in the past two years largely satisfied much of pent-up demand for new vehicles left from the recession years.

Economist Charlie Chesbrough of the industry analytics firm Cox Automotive had predicted the weakest February in three years.

"February has typically been in the bottom three months of the year for new-vehicle sales, as much of the market waits for the spring selling season," he said.

- Used cars, redesigns -

Automakers also were offering fewer deals last month. The industry's average new car transaction price was two percent higher than last year at $35,444, according to Kelly Blue Book.

Sales were down for some very popular truck models -- such as the Chevrolet Silverado (off 16.3 percent) and Ram trucks (down 14 percent) -- suggesting consumers may be waiting for the new redesigned versions that were announced earlier this year.

FCA US highlighted that its redesigned Ram 1500 truck will begin production in March. Chevrolet's popular truck will go on sale in the fall.

Industry insiders were still optimistic that consumers will return to showrooms. Tax refunds will trickle in over the next few months, and the recently-passed tax cuts were taking effect, with consumers likely to see more money in their paychecks each month, analysts said.

"Consumer confidence is at its highest level since 2000, the economy is strong, our newest products are selling very well," Kurt McNeil, GM's chief of US sales, said in a statement.

But used cars increasingly are competing for consumers' spending, as more cars leased during in last few years are being returned to dealers. That is expected to mean sales dipping 400,000 units in 2018 to finish the year at 16.7 million, according to Cox Automotive.

Adding to the pressure on new cars, interest rates for car loans went up in February, according to analytics firm Edmunds. Rates averaged 5.2 percent compared to 4.9 percent in 2017 -- slightly raising monthly payments.

"Car shoppers tend to have tunnel vision when it comes to their monthly payments," said Edmunds analyst Jessica Caldwell.