Ford enjoyed its best-selling March in ten years, the company said Friday. Other traditional automakers reported sales growth that topped already-historic levels. Trucks and SUVs continued to be hot sellers.
But through the first quarter of 2016, major OEMs are collectively on pace to deliver 16.56 million units this year, a seasonally adjusted annual rate that falls below many economists' forecasts of a second consecutive year of sales exceeding 17 million units. Shares of Ford, General Motors and Toyota all fell in trading Friday.
The SAAR sparked mixed feelings among many experts Friday. Yes, the auto industry's record sales may have peaked and receded. Yes, sales are still at robust levels.
A combination of low gas prices, low interest rates and a healthy jobs report issued Friday buoyed hopes the industry had stabilized near those record levels, and IHS Automotive senior economist Charles Chesbrough says those factors "will keep sales humming along through 2016." But others noted automakers are trying to maintain that foothold through more aggressive loan and lease options and heavily incentivized purchases.
"The market is forecasted for flat or minimal growth, which means automakers are scrambling to protect share and eek out increases," says Kelley Blue Book senior analyst Rebecca Lindland. "This could lead to some aggressive financing and incentive offers for consumers, putting them into cars they can't afford long term and inflating sales results that are borrowing from tomorrow."
Meanwhile, Experian Automotive says 1.8 million cars will come off lease by the end of the year, furthering concerns that the new-car market will soften as a glut of these cars will make many used cars more attractive propositions for consumers.
"The market is forecasted for flat or minimal growth, which means automakers are scrambling to protect share and eek out increases." – Rebecca Lindland
For now, many automakers are pleased with the results. Ford sales increased 8 percent year over year, with the Blue Oval's SUVs capping the best sales quarter in company history. Sales of the Edge climbed 49 percent year over year and the crossover Escape posted an 8 percent gain.
General Motors said its retail market share increased a full percentage point in the first quarter to 16.4 percent, led by Chevrolet sales that increased 7 percent and GMC's best March performance in 11 years. Bolstered by a new Civic on the market, Honda saw sales climb 9 percent in March, while Toyota's fell 2.7 percent. Nissan posted a 13 percent gain, including a 24 percent jump for its Titan pickup (pictured above).
A tidal shift away from sedans and toward SUVs, trucks and crossovers continued. Sales of small cars have decreased 7.3 percent through the first quarter, while sales of luxury sedans have dropped 13.8 percent. Perhaps reflecting a growing housing market, pickup sales are up 6.5 percent, and sales of SUVs and crossovers continue their torrid pace, increasing 9.3 percent on the year. All of which gives automakers some breathing room in maintaining record or near-record sales numbers.
"The outlook for the year remains robust, even with some retail softness and noise in March," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "In fact, year-to-date volume is still nearly 5 percent ahead of year-to-date March 2015, leaving some room for volatility and the expected slower growth rates later in the year."