Daily Management Review

US Detroit Automakers – Picking up the Pace


US auto sales back on race track in March after long frozen winters.

US consumer’s confidence mounted steeply in March 2015 after an ease during the harsh winter season. Despite a sharp rebound, the US auto industry experienced upsurge in demand for new vehicles in March. Detroit automakers recorded mixed sales results for the month of March 2015.

Toyota, the world’s largest automobile manufacturer is back with a bang in the most profitable market in the world. The Japanese automaker’s profit mounted 5% in comparison to previous year, much higher than the industry average. The Industry’s revenue for the first quarter was significantly driven by profits on sales of trucks and SUV’s. These two categories are believed to be more profitable when the prices of gas are lower. Sales for new vehicles increased slightly by 0.6% to about 1,545,802 vehicles as against the previous year. The top performers were Toyota Motor, Hyundai Motor, Kia Motors and Audi. While, the insignificant growth in new vehicle sales was not a great news for the automakers, few major carmakers emerged as winners.

As the new vehicle sales started picking up since last month, it signals that the industry sales is likely to be more favourable in the second quarter of 2015. The annual sales rebounded back in March to 17.15 million vehicles in comparison from 16.2 million in February. High vehicle prices are the reflection of resilient sentiments across the US industry. According to TrueCar Inc. the online prices for new vehicles hiked to $32,201, recording a growth of 2.1% as compared to previous year. This was due to strong pick up of demand for utility vehicles as well as trucks.

Both Ford and Lincoln witnessed slowdown in sales for March 2015. The best-seller F-series growth declined as the truck supply failed to meet the demand and the company continued to focus towards increasing production at second assembly plant in the US.  According to Autodata Corp., the seasonally adjusted annual sales rate (SAAR) for industry’s vehicles reached the mark of 17 million, mainly contributed by substantial growth in light vehicle sales. This is a clear indication that the year 2015 will turn out to be promising for auto industry worldwide.

With leading automakers attaining record sales, the US auto manufacturers posted sale of about 1,537,820 light vehicles in March and the European companies outperformed the expectations. Despite market share dropping to a level below previous year, General Motors led the Auto industry by registering 250,000 deliveries. Ford followed General Motors, claiming a market share of 15% while Toyota accounted for almost 14.7% of the total market.

The most popular vehicle of General Motors, Chevrolet Silverado pickup’s sales increased 7% while that of GMC Sierra rose 3.2%. However, Ford experienced a 3.4% decline in sales, dragged by plunge in F-Series pickup sales. On the contrary, Fiat Chrysler Automobiles continued to perform outstandingly with its sales edging up 1.7% in March, thereby registering a sales gain for 60th consecutive month.

The compact SUV’s are gaining more popularity among the consumers while the demand for passenger cars are facing setback. With the US economy regaining back its momentum, the year 2015 is expected to be marked by strong demand for trucks.