8 first-half sales tales

U.S. auto sales aren’t tumbling down a cliff, but they’re clearly no longer in flat, steady territory either.

After six monthly declines to start the year, the industry is down 2.4 percent halfway through 2019. It’s on pace to finish at slightly more than 16.9 million, which would be the first time shy of 17 million since 2014.

That’s still strong by historical standards. And all analyst bets are off if the Federal Reserve cuts interest rates this year, as rising auto loan rates have hurt demand.

“The U.S. economy continues to grow at a healthy pace. Jobs are plentiful and inflation remains low,” General Motors’ chief economist, Elaine Buckberg, said in a statement last week. “Auto demand was better than anticipated in the first half and we expect strong performance in the second half of the year. If the Fed cuts rates, as widely expected, lower financing costs will provide further support to auto sales.”

Here are some developments in the first half of 2019 and things to watch during the summer selling season and beyond.

What’s been the hottest segment in the industry for years is on track to shrink in 2019. Sales of compact crossovers are down 4 percent through June. It’s still the largest segment in the U.S., but automakers are up against increasing competition for a pool of customers that’s no longer growing, which is a potentially troublesome combination. The Nissan Rogue, Ford Escape and Jeep Compass have been the segment’s biggest decliners this year.

There’s no sign of slowing momentum for pickups. Full-size pickups rose 1.5 percent in the first half of the year, with Ram taking share from most of its rivals, and the Ford Ranger and Jeep Gladiator pushing midsize pickups to a 15 percent gain.

Ram’s two-truck strategy — it’s still building and selling the previous generation to attract cost-conscious customers, while raking in huge profits from the higher-priced new version — has it poised to finish the year ahead of the Chevrolet Silverado for the first time. Ram nearly doubled its lead over the Silverado in June to more than 44,000. The Ford F series remains solidly in first place, but it will likely face mounting pressure in the second half of the year as the battle between Chevy and Ram intensifies.

“We are well on our way to selling a million pickup trucks in the United States in 2019,” Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service, said on a conference call last week. “We haven’t eclipsed a million since 2005.”

The margins haven’t been all that big lately, but Subaru has stretched its streak of year-over-year gains to 91 months as of June. If that’s not impressive enough, Subaru is now the industry’s largest brand that’s still growing in the U.S., as all six brands with more market share posted declines in the first half of the year. It’s up 5.2 percent on the year.

The Detroit 3’s sales declined 3 percent in the first half. Japanese brands were down 3.5 percent, and European manufacturers dipped 1 percent. But Hyundai and Kia, the Korean brands that were struggling mightily as car sales began to plummet in recent years, are up in 2019. And Genesis, Hyundai’s luxury spinoff, is the fastest-growing brand in the country, up 38 percent on the year. Hyundai mostly has the Kona subcompact crossover to thank for its resurgence. Kia’s three-row Telluride has quickly put up big numbers, and the Genesis G70 is off to a fast start.

June marked the 12th consecutive month of year-over-year declines for two brands: Chevy and Mazda. Both makes also posted their lowest sales totals in the first half of a year since 2011. The only brands that have posted negative numbers for more than a full year are Mini, Fiat and Smart.

A year ago, Jeep was one of the nation’s fastest-growing brands and seemingly headed toward 1 million U.S. sales. But it ended up falling just shy of the seven-figure mark and has become the biggest decliner among the industry’s 10 largest brands, down 7.8 percent through June. Sales skidded 12 percent lower last month, led by nearly 30 percent drops for the Cherokee, Renegade and Compass. It’s a good thing Jeeps are built for rugged terrain, because the ride is getting bumpy.

Car sales fell 11 percent in the first half of 2019, but the subcompact and minicar segments are bucking that trend. Sales of the Chevy Spark, Ford Fiesta and Kia Soul are up considerably this year. Meanwhile, the wreckage in the bigger car segments is downright ugly. Midsize cars were down 7 percent, compacts were down 16 percent and large cars plunged 21 percent. About the only good news for brands remaining in those segments is that so many nameplates are being killed off that there’s not much competition left.

Excluding its Sprinter commercial van business, Mercedes-Benz sales increased by five in June. Not 5 percent — five vehicles. With all the variables that factor into each month, that kind of consistency is hard to come by. Two other luxury brands reported sales within a hair of their year-ago results: Audi declined by 62, while Volvo was up 66. Overall luxury sales rose 1.5 percent.

Hannah Lutz contributed to this report.

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Section Page News – Automotive News

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