U.S. automakers on Friday have reported another year of stable sales of pick-up trucks, as discounts throughout the crucial holiday season and lower interest rates on vehicle loans which brought buyers while demand for passenger cars retreated even more.
Passenger cars have dropped out of favor with buyers despite lower oil prices and automakers have concentrated on selling larger sport utility vehicles (SUVs) and pick-ups that are more profitable as well.
December is one of the hottest months for auto sales in the United States as buyers take benefit of significant discounts provided by the automakers to clear inventory.
Analysts expect overall 2019 U.S. sales to drop by about 1% from 2018, but still, finish over 17 million vehicles for the fifth consecutive year.
But sales could drop below the 17-million mark this year, industry experts have cautioned, as the demand has peaked after the long bull-run since the 2008 financial crisis.
“Pent-up demand among consumers is drained,” stated Haig Stoddard, a senior industry expert at forecasting and analytics company Wards Intelligence, adding that he expects sales to decline further this year as economic growth also drops from 2019.
Auto consultants LMC Automotive and J.D. Power have forecast overall light-vehicle demand to drop 1.4% to 16.8 million units this year.
“Automakers will face a lot of pressure to stand out in a crowded market with almost 60% more redesigned or new entries in 2020 than there were in 2019,” stated Jeff Schuster, LMC Automotive global vehicle forecasts president.
Total incentive spending by automakers as a percentage of vehicle retail costs remains close to 11%, the highest level since the 2008 recession, as per the auto consultants.
General Motors, which was hit by a month-long strike by its 48,000 hourly workers, reported a 6.3% drop in sales for the fourth quarter at 735,909 vehicles.
“Our fourth-quarter stocks were leaner than we wanted, but as we get ready to release our all-new full-size SUVs, we look forward to another solid year in 2020,” stated Kurt McNeil, vice president, GM U.S. sales operations.
GM’s total U.S. sales dropped 2.35% to about 2.9 million vehicles in 2019, with volumes of its Trax compact SUVs surging about 30% to 116,816 units. Sales of its Cruze cars dropped 66%.
Toyota Motor reported a 5% decline in U.S. passenger car sales in 2019, compared with a 0.8% drop in sales of its trucks and SUVs. Total sales dropped 1.8% to 2.4 million vehicles.
Sales of Fiat Chrysler Automobiles dropped 1% to 2.2 million vehicles last year. The Jeep maker reported an 18% increase in Ram pick-up truck numbers.
“We have read the expectations that sales may drop a bit in 2020,” stated Reid Bigland, head of U.S. sales at Fiat Chrysler.
Silicon Valley automaker Tesla Inc delivered about 367,500 vehicles during the last year, just meeting the low end of its target to provide 360,000 to 400,000 vehicles.
Nissan Motor’s 2019 U.S. sales dropped by 10% to a six-year low of 1.3 million vehicles.
Ford Motor is set to report quarterly sales on Monday.