The American automotive market at half-mast in the first quarter

The American automotive market experienced a first quarter at half-mast, with most major automakers recording a decline in their sales of new cars.

From General Motors (GM) to Fiat Chrysler to Toyota, gloom reigned in the general staffs during the first three months of the year, marked by a steady drop in sales of compact cars (sedans and city cars), while interest in large cars (flatbed vans or pickups, crossovers and SUVs or urban 4X4s) is not slowing down.

“The industry had a difficult first quarter but, with the spring, we are confident that demand will recover, especially as economic indicators, such as borrowing rates and the labour market, remain solid,” summarized Reid Bigland, head of sales at Fiat Chrysler.

GM, the leading American car manufacturer, sold 665,840 new vehicles, 80% of which are large cars, in the first quarter, down 7% year-on-year.

The four-brand group (Chevrolet, Cadillac, Buick and GMC) explains that production at some of its plants was slowed in the first quarter due to a transition between models.

These temporary problems are expected to be resolved in the coming months, which is likely to boost sales, especially as GM is also considering boosting its pickup production capacity in Flint (Michigan, north).

“We are optimistic about the pickups and anticipate a rebound in sales for the rest of the year,” says Kurt McNeil, sales manager.

The electrical resistance

While the decline in quarterly sales was also expected at Fiat Chrysler, Jeep’s decline is particularly surprising because it is this brand that has been driving the group’s new registrations for almost a decade.

Sales of the group around which rumours of a merger with the French Renault or Peugeot circulate fell by 3% year-on-year to 498,425 units. Jeep, which alone accounts for 42.7% of Fiat Chrysler’s US sales, saw its registrations decline by 7%, mainly due to the Renegade (-26%), Compass (-14%) and Wrangler (-10%).

The Chrysler (-32%) and Fiat (-45%) brands confirm the disenchantment with small cars in the United States.

Ford, the second largest American automotive group, plans to release its figures on Thursday.

Foreign manufacturers are not immune to the gloom, as Toyota, whose quarterly sales fell by 5% to 543,714 units.

Sales of “clean” cars held up somewhat well, with the Chevrolet Bolt, 100% electric, showing only a 1.3% drop in new registrations.

Tesla, a specialist in electric vehicles, is expected to publish its results by Wednesday.

Most analysts anticipate a decline in quarterly sales from 3 to 4.6%, to less than 4 million units for the industry as a whole.

“We can say with certainty that sales of new cars have reached their peak. The question now is what is the new standard,” says Jeremy Acevedo at Edmunds.com.

The American automobile market is facing headwinds: saturated second-hand market, interest rates at their highest level in four years and rising car prices due to the trade war that has increased component costs.

To this are added “low promotions (…) So consumers have no particular reason to buy,” says Jonathan Smoke, economist at Cox Automotive.

Economic situation

Neoliberal discourse has its limits. In Mr. Ronald Reagan’s America, they are precisely confused with the borders of each of the 50 states. Faced with a federal disengagement – which suffers only from an exception for military spending – local governments and their assemblies, more sensitive to unemployment figures than to ideological incantations from Washington, are intervening more and more openly in economic life. With one objective: to save or create jobs, and in close cooperation with employers, on the one hand, concerned about preserving their market share and, on the other hand, employees, concerned about their future. This is very often over the unions, which, with their backs to the wall, have no alternative strategy.

Across the Federation, imagination is in power to optimize resources, mobilize stakeholders and generate synergies, particularly between the research and industry communities. Sometimes also to neutralize wage and working conditions claims. Behind the smoke screen of the Reaganian “laissez-faire” – which, in France, really only gives a change to the patented “opinion leaders” and other appointed “observers” of America – is the reality of the rise of several dozen “territorial economies”. One state has taken a step forward in the development of these new and ambiguous forms of entrepreneurship-partnership: Michigan, which, as long ago as sixty years ago, had been the crucible of automotive civilization.