August's U.S. sales results are in. Upon their release, GM crowed about their market-bucking triumph– neglecting to mention the fact that 25 percent of those sales sailed with the fleets. Meanwhile, Chrysler blamed its sales decline on diminished fleet flogging. Ford was "encouraged by sales of their crossover vehicles" (i.e. stuck in the dog house). And Toyota pinned their sales drop on the subprime lending crisis and a supply-line-interrupting Japanese earthquake. Whatever. Bottom line: August wasn't kind to many of the models we're tracking on your behalf.
Passenger Cars
Despite GM's hefty commercial sales, their Chevrolet Impala fleet queen fell 4.5 percent below last August's sales total. Year-to-date (YTD), Impala sales rose 14.8 percent over 2006. Chrysler must have stopped dumping 300s into the fleets; sales plunged almost 23 percent from last August, down 15 percent YTD. The Ford Fusion dropped 19 percent from last August, although holding steady with a 0.38 percent YTD increase. Camry sales leveled off, up one percent over last August. The longer-term trend is upwards, with a 7.3 percent increase YTD.
Pickup Trucks
After ramping up Silverado incentives, the pickup's sales picked up by 16K units from last August. While that's a whopping 31 percent surge, YTD they're down 2.2 percent. Huge rebates didn't help the Dodge Ram; sales fell 5.5 percent, down 1.3 percent YTD. Ford offered small-to-moderate rebates on their F-Series pickups, failing to forestall a 9.9 percent tumble, dragging the model down 12 percent YTD.
Toyota backed off incentives on Tundra. Sales dropped by 5K units from July to August. But the new Tundra is still kicking the old Tundra's ass. Sales rose 69 percent from last August, up 58 percent YTD.
Truck-Based SUVs
Sales of "traditional" SUVs continue to slide as fuel-conscious consumers make the move to CUVs and family sedans. Sales of Chevrolet's Tahoe went down by eight percent from last August, 14.8 percent YTD. The Dodge Durango plunged 41 percent from last August, down 27 percent year to date. The Ford Explorer's drop wasn't quite as precipitous but it was still down 26 percent from last August and 23 percent YTD. Toyota 4Runner sales were actually up slightly, rising one percent from last August. But they're still down 18.4 percent YTD.
CUVs
As predicted, SUV refugees are igniting sales of CUVs; as the former drops, the latter rises. The Chevrolet Equinox helped power GM's August increase with a 13.5 percent gain. That said, Equinox sales fell by 23 percent YTD. Chrysler's Pacifica continues to tempt the executioner's blade, with sales down 48 percent from last August and 27.6 percent YTD.
Ford continues to pin its hopes on the Escape. It didn't fail them. Sales of FoMoCo's cute-ute rose by 4.4 percent over last August, up 3.2 percent year to date. The redesigned-for-‘07 Toyota RAV-4 continues to sell well; August sales were up by 11 percent, 13 percent YTD.
New Models
All three of our new-for-07 models had been dropping since May. All three showed some recovery in August. The GMC Acadia picked up almost 200 additional sales from July– but still clocked in some 3.2K below May's peak. Even so, the Acadia remains the most popular of GM's Lambda-platform CUVs, selling 5.8K in August (vs. Enclave's 3.8K and Outlook's 3.2K). The Ford Edge and Jeep Compass both showed strong gains over July, each selling around 1100 additional units.
Total Sales
As most anyone who follows the auto industry knows, GM's total sales were up six percent from the same month last year. However, even with that strong sales spurt, they're down 7.4 percent YTD, with production cuts set to slice both sales and share even deeper.
Chrysler's down six percent from last August, down 14 percent YTD. While decreased fleet sales certainly played a part in the decline, we're thinking a combination of uncertainty over the future of the company and a truck/SUV-heavy product line were more significant factors.
Ford's in a similar situation and their numbers show it. The Blue Oval Boyz' August sales sank by 14.4 percent; a 12.5 percent drop YTD. Proving that even a perennial sales champ isn't entirely immune to market forces and economic meta-fluctuations, Toyota's August sales dropped 2.8 percent. But they're still up 4.9 percent YTD.
The Future
GM's set to introduce their latest Hail Mary model: the Chevrolet Malibu. Honda's refreshed Accord should keep the ‘Bu from conquesting quality-conscious buyers, and gives Toyota's Camry buyers something to think about.
Chrysler's in flux; their new CEO's still figuring out what to keep and what to cut. Ford's still relying on their truck/SUV/CUV lineup to carry them. And Toyota's juggernaut chugs on.
All of them (and the rest) are sailing straight into economic headwinds. It's been a tough year for the U.S. auto industry– that's about to get a whole lot tougher.
Watching the news, I have to agree about it getting a whole lot tougher. The big 2.8s struggle to survive could scarcely be done in a more hostile environment. It will be very interesting to see how the Malibu does. I hope for GM’s sake that it is a hit. Ford, I have no hope for. The Escape is going ok, but that is not nearly enough to save them. And Chrysler, well, it’s been swell knowing you.
Where can I get the model by model figures?
Has anyone noticed how Mitsubishi are making huge gains? Credit where credit is due, that Mitsubishi is rising and rising fast. Who needs DaimlerChrysler? ;O)
It’s nice to see the Tundra doing well, especially while Toyota are easing off the incentives. More profit for them and more trucks sold. That is not good news for GM and Ford. People who slated the Tundra would do well to remember how “slow and steady” is Toyota’s mantra and not “Bold and brash”.
GM’s hoodwinking of the sales figures highlights how much trouble they are in. If they have to resort to under tactics like that, then maybe it’s time to consign GM to the history books? With a company the size of GM they are going to need at least 5 cars which are hits, sold with no incentives. That’s a big ask.
But GM isn’t the only car company who’ve gone ga-ga. Nissan have well and truly lost the plot. I don’t know about the United States, but in the UK, this is Nissan’s line up:
Micra (Small city car)
Qashqai (CUV)
Note (CUV)
Murano (SUV)
X-Trail (SUV)
350 Z (terrible sports car)
There’s no mid range hatchback or family sedan. What’s going on?!
Even so, the Acadia remains the most popular of GM’s Lambda-platform CUVs, selling 5.8K in August (vs. Enclave’s 3.8K and Outlook’s 3.2K)
Makes sense: who would want a car that sounds as if it comes out of your desktop work computer?
Thanks for the numbers Frank, and I agree, it will probably get tougher on everyone. I may be in the market for a new car soon, and will probably wait until incentives creep back up, as my job is safe.
In honesty, I’m impressed that GM was even able to fudge their numbers upward, it could have been much worse. On the Chevy side, given that pricing on the Accord just dropped and it’ll be starting at over $20k, the Malibu’s prospects just got much better. Oh my heavens we’re in for an interesting year…
kazoomaloo-
keep in mind that GM’s “sales” are deliveries to dealers-not retail. This may make it easier for them to pump up numbers for a month, you can strong-arm your dealers far easier than the buyers.
And as Frank noted, they simply went fleet crazy, and bought market share for the ‘Rado.
KatieP-you are right on about the Tundra, Many GM fans have tried to put it’s increase down to incentives. This month showed that folks want this truck.
As always Frank, thanks for the charts. The year trend lines remove the obfuscation that one month results can create.
Whats most telling about these numbers and their meaning for Detroit is not just the overall change in volume but the amount of that volume that has shifted from body on frame trucks and SUVs which used to earn about 100% profit to cars and CUVs which earn very little to negative profit. There’s no way they can downsize fast enough to get earnings in line with costs.
KatiePuckrik: But GM isn’t the only car company who’ve gone ga-ga. Nissan have well and truly lost the plot. I don’t know about the United States, but in the UK, this is Nissan’s line up:
Micra (Small city car)
Qashqai (CUV)
Note (CUV)
Murano (SUV)
X-Trail (SUV)
350 Z (terrible sports car)
There’s no mid range hatchback or family sedan. What’s going on?!
In the US, Nissan offers the Versa (small hatch and sedan), Sentra (smallish sedan), Altima (high quality CamCord competitor) and Maxima (bloated mess of a sedan). It’s not a bad range, save for the Maxima. They add to this the SUV’s above plus the massive Armada SUV. Not sure how their sales are in comparison but I don’t get the impression they are doing terribly, especially with the attractive Altima.
Thank You for the graphs, very informative, and clearly illustrate that with a variety of programs at different times of the year.
Making yearly monthly comparisons is meaningless and a waste of time.
you are right on about the Tundra, Many GM fans have tried to put it’s increase down to incentives. This month showed that folks want this truck.
I am no GM fan by any stretch of the imagination, and I am generally impressed by Toyota management, but the Tundra is no home run. According to Edmund’s TCI index July incentives on the Tundra were $4625; the August TCI figures aren’t out yet, but the consumer cash back incentives alone were at the $3k mark, so the total incentives were likely something fairly close to $4,000. (This is quite similar to GM, which had July incentives on the Silverado of $3,995.)
At the same time, Tundra sales fell 18% during August. Part of the sales decline may be attributable to the fact that August has one less selling day than does July, but that can’t explain the entire decline. It seems fairly obvious that cutting incentives reduced interest in the vehicle.
The long-term prospects of Toyota in the truck market are good. TMC is clearly sacrificing profits for market share, which is a strategic move on Toyota’s part to take conquest sales from the domestics and to kick them while they’re down.
But for the moment, they are doing what they can to push volume, not profits, and their short run performance with the Tundra is not particularly impressive. It’s not possible to boast of one’s success while simultaneously bribing consumers to the tune of three grand in order to make a sale. If Toyota needed to behave this way to support the entirety of its product line, then it would be just as much of an also-ran as are the Detroit 3.
GM tosses another Hail Mary – how appropriate. Now GM is targeting owners of their SUV’s who already own import sedans, good luck with that.
http://www.reuters.com/article/marketsNews/idUKN1137778520070911?rpc=44
Since Nissan somehow doesn’t exist in the August sales here on TTAC, here are some of their numbers:
Pickup Truck:
Titan goes from 5650 last year to 6985 this year, a cool 23.6% increase. Still down 9.2% YTD though.
Truck based SUV:
Armada 2,959, compared to 2,437 last year, a 21.4% increase. Sales are actually up 1% YTD!
Other notable figures: Altima up 25%, Versa up 120%, Maxima down 46%, 350Z down 29%
Overall, Nissan sales up 6.3% compared to August 2006.
Bunter1
A sale is a sale when a dealer reports it’s sale to GM. It is not a sale to a dealer!
GM’s fleet sales were not a sneak in. As a dealer we were told that late summer early production would be heavy fleet. As GM lightens it’s saleas to fleets the remaining purchases are expected early in the model year. This information was told to dealers in May.
Also I think you will see the Enclave outsell the Accadia. You have to remeber that the Enclave came out as a 08 not an 07 they are just ramping up production of the Enclave
cfisch: GM dealers may have known that August would be a month for high fleet sales.
For the general public, however, GM crowed about its sales results in the media, acting as though the increase (while even Toyota’s sales were down) was because of retail customers suddenly discovering how good its products are.
Which is more than a little sneaky, in my book.
CFISCH-
Sorry buddy, this has been hashed through here before. What GM announces at the end of each month are deliveries to dealers. I’m sure that the dealers DO report retail sales to GM, that does not mean GM does so to the public.
PCH101-
I don’t think we are in deep disagreement. Certainly incentives have been part of the tundra’s sales. The initial information I have seen indicated a major roll back on the Tun in August vs. a big increase for the Rado (they were virtually tied on incentives in July), yet the Tundra still shows a bigger percentage increase over last year than the Chevy.
People tend to expect the moon from Toyota (and Honda). Could any other manufacturer introduce a new model into a market dominated by it’s competitors, with high owner loyalty working against it, and show this kind of increase without it being hailed as a blow ’em away winner?
I think every Detroit company would love to have a “qualified success” like the Tundra. I bet Chevy wishes they had a truck that was gaining ground as well.
Just a thought.
Cheerio,
Bunter
Sorry buddy, this has been hashed through here before. What GM announces at the end of each month are deliveries to dealers. I’m sure that the dealers DO report retail sales to GM, that does not mean GM does so to the public.
Isn’t this the way everything works? If Pepsi sells 1000000 cases to grocery stores, they consider them sold, correct? They don’t wait until consumers actually buy them. Isn’t everything this way?
John
In the automotive industry manufacturers count sales when a dealer sends in an RDR (Retail Delivery Report) which means that the vehicle was delivered to a customer. Not when the vehicle is sold from the manufacturer to the dealer.
As the old dealer saying goes ” You don’t count headlights (vehicles coming to dealer) you count tailights (vehicles leaving the dealer, going to customers)”.
Do manufacturers and dealers get creative to generate RDR’s absolutely, they all do, they all play the game. One month its fleet, the other month its family, then its friends, then its enemies, and it keeps on going.
The month is divided in 10 day periods, and the last 10 days get very interesting. Since customers wait till the last 10 days looking for the best deal, most dealers file in an RDR and deliver the vehicle the following month, since the customer did the deal on the last day of the month.
The initial information I have seen indicated a major roll back on the Tun in August vs. a big increase for the Rado (they were virtually tied on incentives in July)…
OK, so Toyota pumps up the incentives in June and July before backing off slightly in August. GM responds with a boost of its own. Sounds like everybody’s dancing to the same tune, but somebody got onto the dance floor before the other.
…yet the Tundra still shows a bigger percentage increase over last year than the Chevy.
GM sold about 693,000 Silverados in 2006; Toyota sold 126,000 Tundras during the same period. For GM to have a comparable gain in percentage terms, it would need to sell 5.5 times more units to get the same percentage result as did Toyota. So comparing on a percentage basis does not provide for a fair comparison.
“keep in mind that GM’s “sales” are deliveries to dealers-not retail.
That statement is simply incorrect.
All the car makers report numbers the same way – retail deliveries.
What is left for GM to sell to keep the numbers up? Ford is also having a yard sale of sorts, chrysler has nothing anybody wants to buy. Overall I’d load up on Toyota stock and watch it grow.
All the car makers report numbers the same way – retail deliveries.
This statement is incorrect. Manufacturers do not all report sales figures in the same fashion.
For example, Ford reports based upon new vehicle registrations. GM reports based upon vehicles delivered to its dealers and to fleet buyers. When Chevy and Ford each claimed during 2005 to be the leading brands in America, both of them could make this claim because each of them used a different methodology in claiming their “sales.”
Again, I don’t necessarily GM for reporting in this fashion. But it is a method more prone to channel stuffing and manipulation, and observers need to understand that if they are going to put these numbers into their proper context.
pch101,
If Ford counts regitrations, and GM sales to dealers, what does Toyota count? What do they other manufacturers count?
Let’s go over this one more time. When a car is sold to a dealer it is wholesaled. When the dealer delivers it to a customer it is RDRed(retail delivery report) or FDR (fleet delivery report. ALL manufactures do it the same way. There have been times in the past when a manufacturer would hold FDR’
s in a desk until needed. That is pretty much gone.
Pch101-
Yes the Tun vs. Rado percentages may be apples vs. oranges. I’ll give you that.
I still hold that any company putting up these increases against well established players with a loyal fan base (alledgedly) as the “new kid on the block”, did very well. If the new Malibu performs as well in the market people will act like GM walked on water.
I really think part of it is higher expectations for companies like Toyota and Honda. It’s not unfair, it comes with being the benchmarks.
Thanks for the back up on the “GM deliveries” item also.
And your right that it is not a “wrong” way to report, though GM’s distortions in the press using it are. But, that’s marketing.
As stated before, that’s where Franks data and charts help sort out the truth from the smoke.
Frank- A couple of requests for charts I’d like added. Honda & Nissan monthly and ytd charts to complete the big 6. And could you chart the “top brand” race with Chevy and Toyota (& Ford?).
I suspect if it gets close GM may pull some more stunts to keep that title.
Cheerio,
Bunter
Let’s go over this one more time. When a car is sold to a dealer it is wholesaled. When the dealer delivers it to a customer it is RDRed(retail delivery report) or FDR (fleet delivery report. ALL manufactures do it the same way.
Again, this misses the point. When GM reports “deliveries” via its PR and Investor Relations departments to the media and the public, including in its press releases and on its website, it is reporting sales that the company made to dealerships, not sales made by dealerships to the public.
I have no doubt that GM gathers information from the dealer level — after all, that’s how dealers collect their holdback after the unit is sold. But this does not change the fact that the delivery report made by GM to the rest of us is based upon these wholesale transactions.
The industry standard for press releases is based upon new car registrations. GM has argued in the past that it does not use this reporting method because some buyers don’t register their cars, which would make the data inaccurate. Personally, that alibi sounds like a serious crock of something-or-another to me, but that’s the spin that comes out of Detroit to defend the practice.
pch101,
What is your point, that every one else counts tailights, and GM counts headlights.
Please explain how dealers collect holdback after the unit is sold and delivered by the dealer to a customer.
What system is in place to count the registration of the vehicle that was delivered and plated on the afternoon of the last day of the month.
What is your point, that every one else counts tailights, and GM counts headlights.
The point is that “deliveries” are not the same as retail sales. There are posters here who do not seem to understand this, which is fair enough, but it seems obvious to me based upon the discussion here that an explanation is in order.
I have no problem with the “deliveries” figure, per se. But its use can be suspect, because it is prone to manufacturer manipulation. Manufacturers can push unwanted inventories down to the dealer level and document it as a “sale”, which can impact these numbers. (This is a classic tactic called “channel stuffing” and is used by troubled companies to enhance sales performance reports and income statements.) Of course, dealers can manipulate sales as well, but it is easier to coordinate the effort when applied to “deliveries”, as opposed to getting retail customers to cooperate.
Please explain how dealers collect holdback after the unit is sold and delivered by the dealer to a customer.
Dealers collect holdback after the cars are sold. The point being made here is that GM undoubtedly has the means to report retail sales if it chooses to, as they clearly get sales reporting data from their dealers. (Dealers have no reason not to provide it, being that get paid for sales after the fact.) But for whatever reason, for better or for worse, GM chooses to do otherwise. Again, that’s OK, just so long as we understand the pitfalls of that method.
What system is in place to count the registration of the vehicle that was delivered and plated on the afternoon of the last day of the month.
In states where the information is public, it is gathered from the appropriate state agency. (Polk , for example, uses this method.) This data is generally compiled by research organizations such as Ward’s and then reported back to the manufacturers.
pch101,
In the automotive industry a delivery, a retail sale, a fleet sale, occurs when a franchised dealer reports to its respective manufacturer that a vehicle was sold to “xyz”. Yes, there is an element of creativity, and tremendous pressure by the manufacturer on the dealer to RDR vehicles.
An example of a conversation between a manufacturers regional manager and a dealer on the afternoon of the last day of the month.
RM: I need another 5 RDR’s from you to help me make my numbers this month. There’s a ton of pressure.
D: I can give you 2, that’s all I got.
RM: Give me another 3, and I’ll give you 2″rare to get” and a good deal on a company car.
D: You got it.
Holdback is part of the invoice of the vehicle from the manufacturer to the dealer, most often holdback is paid quarterly and is not based on deliveries, its based on vehicles invoiced to the dealer. In many instances holdback is what assists a dealer in paying the floor planning charges and making curtailement payments. A dealer buys a vehicle from the manufacturer, he gets the holdback for that vehicle.
Polk gathers the date usually with a 30 – 60 day delay, manufacturers make public their sales numbers 2-3 days after month end. They do not rely on registration, but on RDR’s from dealers. Regiatrations come into play when manufacturers and dealers look at marketshare.
As for “channel stuffing” dealers order their own behicles, and get allocated the “hard to get” / “easy to sell” vehicles. Its not in any manufacturer’s best interest to “channel stuff” its dealers.
Its not in any manufacturer’s best interest to “channel stuff” its dealers.
When you’re a public company like GM, which gains some perception of strength by maintaining #1 market share, then of course it does.
Analysts are watching GM’s performance like a hawk, so it behooves GM management to push the numbers however they can. They live and die by the quarter, and these numbers are all part of it.
This is a critical year for GM. Everyone is watching it to determine whether it is going to pull out of a dive or not. I suspect that Rick Wagoner is going to face increasing problems as it becomes clear that this kill-the-fleets/ reduce-the-incentives strategy is a charade, and that the real problem that the company faces is a dire lack of competitive product. (If the product was any good, there would be retail sales to replace the fleet sales, and the giveaways wouldn’t be required.)
Our pending recession is not helping matters, and combined with climbing oil prices and Toyota’s assault on the last bastion — large pickups — may be the nails in the coffin. So yes, these numbers do matter to management, and the top brass have every incentive to care (which, in turn, will likely mean more incentives for the buying public. You know, those incentives that weren’t supposed to be such an important part of the sales effort any more.)
Incentives are consumer driven not manufacturer driven. The North American consumer does not buy or lease a volume new vehicle without some form of incentive.
Manufacturer A can say that they will lower their incentives, which is immediately an invitation to their competitors to raise their incentives.
Vehicles are inexorably becoming commodities, and the blandness coming out of Japanese manufacturers reinforces the commodity aspect of most vehicles.
The credit situation and slowing US economy just saved everyone’s bacon.
If any manufacturer stops selling to fleets, will fleets diminish their purchases or buy from someone else? Its a fine line, possibly Japanese manufacturers increased their sales by filling the fleet void created by GM.
The old line that if the product is good it does not need incentives holds true for the first few months that a product is launched. A product gets old and tired very quickly, and to maintain sales momentum, market share, the plants running every manufacturers will use incentives in one form or another to do business.
Most vehicles traded in are not worth the pay out or residual, incentives are crucial for any dealer to close a transaction.
For the month of Sept Toyota has customer incentives on 2008 Corolla – Camry – Matrix – all 2008 Lexus, the 2007 models all have incentives to move them along.
On top there are dealer incentives on 2008 Camry and 2007 Highlander – Land Cruiser – Camry – Corolla – Matrix.
Incentives are consumer driven not manufacturer driven.
They are inventory driven — the higher the stock of excess inventories, the higher the incentives — which means that they are ultimately product driven because inventories pile up for products that aren’t popular with consumers. It’s a vicious cycle: the manufacturer builds a product that is effectively overpriced, and the incentives are used to help the customer to purchase the product at a more reasonable effective net price.
According to Edmunds, average incentives during July for the domestics averaged $3,268 per vehicle versus $1,536 for the Japanese and $1,681 for the Koreans. Honda was at about $1,100, while Chrysler led the pack at more than $4,000.
Clearly, all incentives are not created equal. The product and the company backing it make a difference in what incentives are offered. A little bit of grease is par for the course, but when incentives start creeping up about $2k per unit, that is an indication that there is too much product and not enough buyers for it at the standard asking price.
pch101,
No one else is posting on this thread its old by now.
Incentives are a “tactical lever” that manufacturers use to achieve a variety of objectives. Lowering inventory is only one of those objectives.
Incentives in a saturated North American automotive marketplace, play many roles. Obvious that a high inventory of an older product which needs to get produced since shutting down the plant would be just as expensive, and the manufacturer got a little crazy building the stuff in the first place.
A 4,000 incentive on an old Dodge Ram competing against a 3,000 incentive on a new Toyota Tundra. Its easy to say that the Toyota must be a better product since it requires less incentive.