3/4/2015
By Jennifer Coombs

There was not much loving going on among US auto sales during the month of February. For the second year in a row, blustery winter weather slowed car-buying activities. Six of the top seven manufacturers reported year-to-year sales increases in February, but all fell short of Street expectations. Vehicle sales were down 2.6% for the month to a 16.2 million seasonally adjusted annual rate (SAAR) for the lowest reading since April 2014. The weakness was centered in North American made vehicles which fell by 3.0% to a 13.1 million SAAR, which was also the lowest since April of last year. Foreign-made vehicle sales were unchanged for the month at 3.1 million SAAR. Ultimately, these results should point to a third straight decline for the motor vehicle component of the monthly retail sales report. Despite the pullback, the total SAAR remains well above recession levels, at a time when the price of gas was low as well.

While most automakers posted year-over-year gains, it was easy to post positive comps since weather conditions were slightly better in February 2015 compared to February 2014. Most automakers blamed poor weather conditions in the U.S for lower than expected sales. Northeast and Midwest markets, as well as others pointed to a spike in fuel prices toward the end of the month. Many dealers noticed that sales tended to taper off bigtime after February 20^th, but that could also be when most President’s Day promotions were ending. Nevertheless, it is worth noting that the sale of trucks was much less affected than the sale of cars.

General Motors (GM) noted that February sales climbed 4.2% from a year ago to 231,378 cars and trucks, while Ford's (F) sales dropped 2.0% to 180,383. Fiat Chrysler Automobiles (FCAU) posted an increase of 6.0% to 163,586 vehicles. The second-largest automaker, Toyota, said its sales increased by 13.3% over last year to 180,467 cars and trucks. Sales were strong among the other Japanese automakers as Nissan Motors’ sales were up 3.0% to 118,436 vehicles, and Honda Motors reported an increase of 5.0% to 105,466. Domestic luxury brands took a beating in February, with GM's Cadillac segment down 13% year-over-year and Ford's Lincoln off 7.0% year-over-year. However, foreign luxury automakers showed some notable strength over last year, with gains noted at Mercedes-Benz, Audi, Jaguar/Land Rover, Bentley, and Lamborghini.

Lastly, despite financial incentives being offered among automakers for the President’s Day holiday, the average vehicle transaction price (ATP) fell slightly in February over last year to $33,299 although the ATP is still about $1,145 higher compared to a year earlier. Average per-vehicle incentive spending among all automakers remained steady at $2,623, or roughly 8.1% of the total transaction price, contracting from 8.6% versus the prior year.

Jennifer Coombs
Wall Street Strategies

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