Q1 Carmageddon for GM, Fiat-Chrysler, Toyota, Nissan, Mercedes, Mazda…

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Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

Ford wisely kept its mouth shut. The problem with Mercedes and BMW is that they don’t yet sell luxury pickups, though they’re finally figuring it out.

The first quarter was not pretty for new-vehicle sales in the US. Deliveries fell 3.2% from Q1 last year, to 3.99 million vehicles. Unless a miracle happens – and miracles are rare in the auto industry – 2019 is going to be the third down-year in a row for the industry, and the fourth down year for GM, Ford, Fiat Chrysler, Toyota, and some others, whose peak sales volume occurred in 2015.

At this pace, 2019 deliveries will fall below the 17-million mark for the first time since 2014 (16.5 million). Industry soothsayers had expressed hopes late last year that 2019 volume would be flat. But so far, those hopes have been nixed by bad weather, lower or no tax refunds, general saturation of the market, massive price increases (we’ll get to those in a moment), and a Wall-Street-inspired push by the industry to veer away from affordable cars to expensive trucks. And car sales have collapsed. Hence my technical term, “Carmageddon.”

There are a handful of automakers with rising sales in Q1. But the five largest automakers booked (sharply) falling sales.

These sales are “deliveries” of new vehicles sold and delivered by dealers to their customers and by automakers directly to large fleet customers (mostly rental car companies but also commercial customers and government agencies). They also include units sold to employees and retirees.

GM sales fell 7.0% in Q1, to 665,840 units. All four brands experienced sales declines. GM said that over 80% of the vehicles it sold were “trucks” – meaning pickups, SUVs, crossovers, and vans. Fewer than 20% were cars. GM isn’t even pushing cars anymore. It’s focused on “trucks.”

The reason is that Americans are willing to pay a lot more for “trucks” than for “cars” even if the chassis and drivetrain are the same, as is the case with crossovers. And so GM has become a serial plant-shutdown-and-layoff announcer [After Wasting $14 billion on Share-Buybacks, GM Prepares for Carmageddon & Shift to EVs, Cuts Employees, Closes Eight Plants].

And GM is proud of these price increases, as it announced today:

“First-quarter 2019 average transaction prices for GM’s all-new, light-duty pickups were $8,040 higher compared to their outgoing models in the first quarter of 2018, with the GMC Sierra leading the segment, according to J.D. Power PIN estimates.”

When it comes to trucks, automakers have figured out how to wring out Americans so that they have a smile on their face. The truck segment is hot, and bigger is better, according to GM:

Combined sales of the 2019 Chevrolet Silverado 1500 and GMC Sierra 1500 crew cabs — the first of the company’s all-new full-size pickups to launch — were up 20 percent year over year.

Crew cabs are four-door pickup trucks:

GM added:

Crew-cab production mix is currently running above 70 percent to meet strong customer demand, up 10 percentage points on average from the previous-generation trucks.

More than 95 percent of the all-new GMC Sierra 1500 crew cab sales are high-end trims including SLT, AT4 and Denali.

Crew-cabs used to be work trucks that allowed you to take a bunch of workers with hardhats and muddy safety boots to your project site. Now they’re luxurious personal conveyances to go to Starbucks with. Americans love big luxurious trucks, and automakers love Americans for it.

Ford doesn’t cooperate. GM switched to quarterly reporting, instead of monthly reporting, of deliveries in April last year. Ford announced late last year that it too would switch to quarterly deliveries reporting. But Ford decided to make everyone wait two extra days and disclose its deliveries on April 4, two days after the other major automakers already reported. So I’m going to check on April 4 to see what Ford is trying to hide.

Meanwhile, Automotive News estimates that in the month of March, Ford’s deliveries dropped 5.5% in the Ford division and rose 1.9% in its Lincoln division. This would cause Q1 deliveries to drop an estimated 1.6% year over year to 586,956 vehicles.

But given how far sales have dropped among its biggest competitors – GM, Fiat Chrysler, Toyota, and Nissan – that estimated decline of 1.6% may well be wishful thinking. But we’ll find out on April 4.

Fiat Chrysler deliveries fell 3.1% in Q1. Among its brands, two had increasing sales: Ram sales in Q1 jumped 20% to 137,013 trucks. And its luxury Maserati brand booked a sales gain of 2.3% to 2,775 units.

But Jeep sales in Q1 fell 6.7% to 212,804 units. Dodge sales dropped 5.5% to 110,517; Chrysler sales plunged 32% to 31,591; Alpha Romeo sales plunged 26% to 4,286; and Fiat sales plunged 45% to just 2,214.

Toyota sales fell 5.0% in Q1, to 543,716 units, with Lexus sales rising 4% to 66,791 units and Toyota brand sales dropping 6.1% to 476,925. Of note, Toyota car sales in the month of March plunged 13%, while its truck sales rose 3.3%.

Nissan/Mitsubishi sales fell 9.7% in Q1 to 407,921 vehicles, with Nissan brand sales plunging 11.6% and Infiniti sales plunging 16.1%, but with Mitsubishi sales soaring 17.6%.

Honda sales rose 2.0% in Q1 to 369,787 vehicles, the sixth largest automaker in the US, and the first with sales gains. Acura sales rose 8.9% to 36,385 and Honda sales ticked up 1.3%.

Hyundai-Kia sales rose 4.6% in Q1, to 288,384 units, recovering after two years of getting clobbered. This includes the brands Hyundai, Kia, and Genesis.

Subaru sales rose 4.7% in Q1 to 156,754.

VW Group sales ticked up 0.9% in Q1, to 150,214 vehicles, with Porsche sales up 7.7% (15,024) and VW sales up 2.3% (85,952) but Audi sales down 3.9% (48,115). VW Group also sold an inconsequentially few Bentleys and Lamborghinis.

BMW sales fell 1.9% in Q1, to 83,123 units. This includes BMW sales that ticked up 0.1% to 73,888, Rolls-Royce sales that are so small they don’t matter (323), and Mini sales that plunged 15.5% to just 8,905. BMW sales peaked in 2015. By 2018, sales had dropped 12%. The problem with BMW is that it’s not selling luxury pickups though rumors are rampant that it will soon, any day now. Two weeks ago, BMW issued a bitter earnings warning with a Ford-like €12 billion cost-cutting program.

Mercedes-Benz sales plunged 9.3% in Q1 to 78,878 units. This includes the zombie brand Smart, of which it only sold 231 units. Like BMW, Mercedes missed the train on luxury pickups years ago. But belatedly, eventually, it will start selling its X-class pickups, including crew cabs. Dude, what took you so long? This is America! Meanwhile, people have been trading in their Beemers and Benzes for Sierra crew cabs.

Mazda sales plunged 15.7% in Q1 to 70,833 units.

Jaguar Land Rover sales rose 9.2% to 35,250, with Jaguar sales up 27% to 10,222 units and Land Rover sales up 3.2% to 24,246. The company is owned by Indian conglomerate Tata.

Tesla doesn’t provide data on US deliveries, but Automotive News estimated that Tesla delivered 27,000 vehicles in Q1, up 16.9% from a year ago. That puts it ahead of Volvo and behind everyone else.

Volvo sales rose 9.8% in Q1, to 22,058. The company is owned by Chinese automaker Geely, and China-made Volvos have been sitting in showrooms for two years.

These are unit sales. With unit sales declining 3.2% in Q1, how do you push up dollar sales? Raise prices. According to research firm J.D. Power, the industrywide average transaction price for new vehicles in Q1 rose 3% from a year ago to $33,319. GM bragged that in its new pickup line, the average transaction price jumped by $8,040 to about $48,000. Americans love to pay more for big equipment. So US revenues for the industry are likely to hang in there, based on price increases – however risky this game of raising prices on falling volume may be.


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