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U.S. auto sales fall in July, as Detroit dials back on inventory, rental sales

DETROIT — U.S. carmakers said on Tuesday they continued to slash low-margin sales to daily rental fleets in July as General Motors, Ford and Fiat Chrysler Automobiles struggled to curb a slide in retail sales. July is on track to be the fifth straight month in which the annual pace of car and light truck sales declined from the same month a year ago, in part because of fewer fleet sales, analysts and industry executives said. July 2016 sales hit a strong 17.9-million-vehicle pace. GM said the seasonally adjusted annual sales rate fell to an estimated 16.9 million vehicles in July. At midmorning on Tuesday, GM shares were down 3.4 percent at $34.77, Ford was down 2.8 percent at $10.91, and Fiat Chrysler shares were down 0.3 percent at $12.05 in New York. GM sales dropped 15 percent from a year ago to 226,107 vehicles, as the company cut rental fleet sales more than 80 percent. The automaker said inventories of unsold vehicles at month's end were 104 days, down from 105 days at the end of June. GM has promised investors to reduce inventories to 70 days by year-end. Ford said its July sales dipped 7.5 percent to 200,212 vehicles, as it cut fleet sales more than 26 percent. Inventories fell to 77 days from 79 the previous month. Fiat Chrysler said sales dropped 10 percent to 161,477, as it also cut back sales to daily rental fleets. Among the top Japanese companies, only Toyota reported a year-to-year gain, with sales up 4 percent to 222,057 — just 4,000 units behind GM. Honda sales were down 1 percent to 150,980 — its first-quarter sales continuing to decline in North America but seeing a big increase in China. And Nissan sales fell 3 percent to 128,295. GM, Ford and Fiat Chrysler have cautioned that second-half financial results likely will be lower than first-half results, in part reflecting production cuts in North America and pricing pressures. The automakers this year have been deliberately dialing back sales to rental-car companies, which often generate little to no profit, while struggling to keep retail sales from sagging further, according to industry analysts. Industry consultant LMC cut its full-year forecast for new vehicle sales to 17 million vehicles. Automakers sold a record 17.55 million vehicles in the United States in 2016.

China's woes sandbag Detroit automakers

Through the first six months of this year, China's auto market is actually up 8.4 percent from the same period in 2014. Still, automakers aren't optimistic after June's 3.2 percent dip in year-over-year sales. Last month marked the first drop in China since February 2013, and the decline could extend through the coming months, which is a concern according to a number of analysts. In Detroit, General Motors might take the brunt of the damage, but Ford could feel some heat too. The China Association of Automobile Manufacturers is already responding to the June dip by predicting annual sales to grow only three percent this year, rather than seven percent that had been predicted earlier in the year, according to The Detroit News. Ford and GM will both release their second quarter earnings before the end of July, and those figures will give the industry a much better idea about the automakers' performance in China. Due to China's massive growth, both Ford and GM have made significant investments there. In 2014, GM announced $14 billion to make the country a focal point, including a goal of 5 million annual sales. Ford, for its part, opened 88 new Chinese dealers in one day alone last year. It has also been working to grow Lincoln since the brand's launch in 2014.The Detroit News took a much deeper look into Detroit's exposure in China, with the overall gist being that we're all uncertain about how things are going to shake out. Some industry analysts feel this is just a temporary blip, while other are much more worried. If you have any interest in the auto market there or its affect on the Big Three, the piece is well worth a read. News Source: The Detroit NewsImage Credit: Greg Baker / AP Photo Earnings/Financials Read This Ford GM

2016: The year of the autonomous-car promise

About half of the news we covered this year related in some way to The Great Autonomous Future, or at least it seemed that way. If you listen to automakers, by 2020 everyone will be driving (riding?) around in self-driving cars. But what will they look like, how will we make the transition from driven to driverless, and how will laws and infrastructure adapt? We got very few answers to those questions, and instead were handed big promises, vague timelines, and a dose of misdirection by automakers. There has been a lot of talk, but we still don't know that much about these proposed vehicles, which are at least three years off. That's half a development cycle in this industry. We generally only start to get an idea of what a company will build about two years before it goes on sale. So instead of concrete information about autonomous cars, 2016 has brought us a lot of promises, many in the form of concept cars. They have popped up from just about every automaker accompanied by the CEO's pledge to deliver a Level 4 autonomous, all-electric model (usually a crossover) in a few years. It's very easy to say that a static design study sitting on a stage will be able to drive itself while projecting a movie on the windshield, but it's another thing entirely to make good on that promise. With a few exceptions, 2016 has been stuck in the promising stage. It's a strange thing, really; automakers are famous for responding with "we don't discuss future product" whenever we ask about models or variants known to be in the pipeline, yet when it comes to self-driving electric wondermobiles, companies have been falling all over themselves to let us know that theirs is coming soon, it'll be oh so great, and, hey, that makes them a mobility company now, not just an automaker. A lot of this is posturing and marketing, showing the public, shareholders, and the rest of the industry that "we're making one, too, we swear!" It has set off a domino effect – once a few companies make the guarantee, the rest feel forced to throw out a grandiose yet vague plan for an unknown future. And indeed there are usually scant details to go along with such announcements – an imprecise mileage estimate here, or a far-off, percentage-based goal there. Instead of useful discussion of future product, we get demonstrations of test mules, announcements of big R&D budgets and new test centers they'll fund, those futuristic concept cars, and, yeah, more promises.