Auto Inventories Highest Since July 2009:Concerns Mount, Ford Vehicle Sales Decline 7.2%, GM Up 1.6%
The top two U.S. auto makers reported mixed results for March amid growing concerns about the industry’s inventory levels and reliance on discounts.
General Motors Co.reported a 1.6% sales increase in March to 256,224 units compared with the same month a year ago. The Detroit, Mich., auto maker said its retail sales were up 5% in March to 203,113 units.
Ford Motor Co. reported a 7.2% sales decline in March compared with the same month a year ago. The Dearborn, Mich., auto maker pulled back on fleet sales and experienced a substantial decline in passenger-car sales.
Top Japanese auto makers, meanwhile, reported mixed U.S. sales results in March, with Honda Motor Co. HMC -0.73% posting a 0.7% decline and Nissan Motor Co.reporting a 3.2% increase.
Ford said fleet sales dropped 17% in March, due in large part to the timing of customer orders. Retail sales for the No. 2 U.S. auto maker fell 1.5%.
Industry watchers are keeping a close eye on inventory levels, which are tracking near historic highs and forcing auto makers to ladle out generous discounts. A glut of used cars flooding the market is also pressuring new-car prices.
The average incentive is expected to reach 10.4% of the sticker price, exceeding the 10% level in March for the first time since 2009 when the country was navigating the financial collapse, the research firm said.
Also troubling to analysts is the number of days a vehicle sits on a dealer lot before being sold. That number is expected to reach 70 days in March, the highest level for any month since July 2009, according to J.D. Power.
I expect this report will take a couple of ticks off GDP estimates, but other reports are out today that also factor into GDPNow and Nowcast GDP estimates.
Auto sales account for approximately 20% of retail sales. A sustained slowdown, which I expect, will be a drag on GDP for some time.
Mike “Mish” Shedlock