US Car Sales Fell Sharply in June as Prices Rose
July 10, 2017—Auto sales continued to slide in June, according to Market Watch, as car buyers react to higher vehicle prices and Detroit backs away from dumping unwanted inventory into rental car lots.
General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV reported steep monthly sales declines compared with the same period in 2016. Those companies have largely moved away from concentrating on rental sales, reinforcing a newfound discipline for domestic players that have been riding a seven-year growth streak since GM and Chrysler sought bankruptcy protection in 2009. Those three companies reported tens of billions in profits during that span, bolstered by tailwinds from falling gas prices and surging demand for profit-rich trucks and SUVs.
Overall industry demand softened over the first half of 2017, however, falling about 2 percent through six months, according to JD Power. The development ushers in an expected plateau for auto sales, an important driver for the broader U.S. economy.
The fleet-sales pullback is having a disproportionate impact on wider volumes. Sales to retail customers at dealerships is down less than 1 percent, but sales to non-retail customers such as government fleets, commercial buyers and rental-car companies is off 7.8 percent, according to JD Power.
Even as automakers ramp up incentive spending to improve dealer traffic, transaction prices are rising as cars are loaded with more safety gear and connectivity features. A consumer shift away from sedans and toward pricier sport-utility vehicles also aided the trend.
Edmunds.com reported that the average monthly payment on a car or truck has soared above $500, forcing buyers to stretch more than ever to obtain a new set of wheels. The firm estimates the average auto-loan length reached a record 69.3 months in June, with the average amount of financing reaching $30,945, up $631 from May.