Major automakers on Tuesday published decreases in U.S. new vehicle sales for April as an indication the long boom cycle that lifted the country’s car market to record sales last year is slowing, sending automaker stocks down.
The fall in sales against April 2016 came on the heels of a disappointing March, which auto companies had brushed off as just a bad month. But two straight weak months has increased Wall Street worries the cyclical industry is on a down swing after an almost undisturbed boom since the Great Recession’s end in 2010.
Car sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at yearly rate of just 0.7 percent as per an advance estimate released by the Commerce Department last Friday.
Excluding the automobile sector the GDP growth rate would have been 1.2 percent.
Market expert Autodata put the market’s seasonally adjusted annualized rate of sales at 16.88 million units for the last month, below the average of 17.2 million units predicted by experts polled by Reuters.
General Motors shares dropped 2.9 percent while Ford Motor moved 4.3 percent and Fiat Chrysler’s U.S.-traded shares toppled 4.2 percent.
The U.S. car industry faces multiple obstacles. Sales are slipping and vehicle stock levels have risen even as automakers have hiked discount rates to draw clients. A flood of pre-owned vehicles from the boom cycle are significantly competing with new vehicles.
