Hyundai sales slip on weaker car volume

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Editor’s note: Automotive News will distribute the monthly U.S. Sales Report newsletter after General Motors, Ford and FCA report third-quarter results, which are expected Wednesday.

Hyundai posted a 9 percent decline in U.S. sales in September behind weaker car deliveries even as crossover volume rose 9 percent to a record 27,374 for the month.

The decline snapped a 13-month streak of year over year monthly gains for the brand.

With an expanded crossover lineup, Hyundai has focused on retail volume and lower fleet business.

Analysts expect U.S. light-vehicle sales to drop in September in part because there were two fewer selling days and Labor Day holiday volume was counted toward August’s tally.

Most major automakers will report September results later today. General Motors, Ford Motor Co. and FCA US plan to release third-quarter sales Wednesday, though FCA may be later.

After falling in each of the first six months of the year, industry sales rose in July and August and have slipped an estimated 0.3 percent through August, according to the Automotive News Data Center.

SAAR outlook

The seasonally adjusted, annualized rate of sales in September is projected to come in around 17 million, based on the average of forecasts from J.D. Power/LMC, ALG, Edmunds and Cox Automotive.
The SAAR has reached or topped 17 million four of eight months in 2019.

While employment gains, wage growth and moderate gasoline prices continue to support sales, higher prices and borrowing costs continue to weigh on consumer demand, analysts say.

“As the global sales outlook continues to weaken, light-vehicle demand in the U.S. remains robust,” said Jeff Schuster, head of global vehicle forecasts at LMC Automotive. “This is despite the headwinds and uncertainty caused by rising tensions with Iran, the UAW strike at GM and ongoing trade concerns.”

With some consumers priced out of the new-vehicle market, automakers have countered the decline in retail demand with higher fleet shipments.

A 9.1 percent increase in fleet sales has largely offset a 4.7 percent decline in retail purchases and a 2 percent drop in leases through August, Cox Automotive said.

Among brands, Ford, Ram, Mitsubishi, Volkswagen and Jeep have posted higher fleet shipments this year, Cox said, while fleet volume has dropped at Chrysler, Hyundai, Kia, Nissan and Chevrolet.

Incentives

Average incentive spending per unit in September is expected to reach $4,208, up from $4,014 last year, J.D. Power said. ALG estimates average discounts rose 4.9 percent to $3,975 last month from September 2018. (See chart below.)  

Odds, ends

  • There were 23 selling days last month vs. 25 days in September 2018.
  • The average interest rate for a new-vehicle loan fell for the sixth month in a row and stayed under 6 percent for the third month in a row in September, Edmunds said. The annual percentage rate on new financed vehicles averaged 5.7 percent last month and a low for the year, compared to 5.8 percent in Sept. 2018.
  • Days to turn, or the average number of days a new vehicle sits on a dealership lot before being sold to a retail customer, was 75 days through Sept. 22, up 7 days from a year earlier, J.D. Power said.
  • September fleet deliveries are expected to total 236,900, an increase of 4 percent from September 2018, J.D. Power predicts. Fleet volume is expected to account for 19 percent of total light-vehicle sales, up from 17 percent last year.

Quotable

 “All year long we’ve been talking about high prices and rising interest rates keeping shoppers on the sidelines, but in the third quarter those pressures eased up just enough to get consumers back in a buying mood. If this momentum continues, we expect a solid finish to the year.”

   — Jeremy Acevedo, Edmunds’ senior manager of industry analysis

“Automakers are in full sell-down mode, which means that car shoppers got to take advantage of some decent promotional offers in September. The cost of purchasing a new vehicle is still a lot higher than it was a few years ago, so it’s a positive sign that automakers and dealers are making the right moves to keep buyers coming back into the fold.”

   — Jessica Caldwell, executive director of industry analysis at Edmunds

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