Wall St. Fears Auto Sales Boom is Over
Major automakers on May 2 posted declines in U.S. new vehicle sales for April in a fresh sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down.
The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But the two straight weak months is heightening Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since 2010 in the wake of the Great Recession.
According to reports from Reuters, General Motors Co. shares were down 3.2 percent while Ford Motor Co. slid 4.1 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.4 percent.
The U.S. auto industry is facing multiple challenges. Sales are slipping and their vehicle inventory levels have risen even as they have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars.
No. 1 U.S. automaker GM reported a 6 percent decline in April sales to 244,406 vehicles, but crossovers and trucks continued to see strong growth.
Sales at Ford, the No. 2 U.S. automaker, fell 7.2 percent in April, while Toyota recorded a drop of 4.4 percent and FCA sales were off 7 percent.
Over the past couple of years, U.S. consumers have increasingly shunned cars in favor of larger crossovers, SUVs, and trucks. While automakers posted steep declines for car sales in April, SUVs, crossovers, and trucks were either up or off slightly.
New vehicle sales hit a record 17.55 million units in 2016. But as the consumer appetite for new cars has waned, automakers have leaned more heavily on discounts. Analysts put the seasonally adjusted annualized rate of sales for April at around 17 million units.
NAFA Fleet Management Association
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