While September’s sales pace (SAAR) rebounded to 17.65M units from August’s drop, the bigger picture could be summed up in three prolonged trends during 2016: Imports, incentives, and imbalance.
First and foremost is the continued strength of imports versus domestic sales. The second is the erosion of profit margins, now amidst plateauing demand — leading to sustained reliance on incentives. The third is strong buyer preference for light trucks over passenger cars.
Through nine months, we’ve seen Nissan (+5.4%), Subaru (+4.2%) and Fiat-Chrysler (+3.7) grab share, mostly at the expense of VW (-12.5%) and GM (-3.8%). Other imports increasing their wedge of the pie during 2016 include Honda and Kia (both at +3.3%).
Regarding the market’s slim profit margins, September was the third consecutive month that finished with incentives surpassing 10% of average transaction prices — at 10.2%. Should incentives revert to lower levels, the small gains in volume for the year (+0.4%) will likely dissipate.
Which leads us to the “truck vs car” balance — or imbalance. Demand for pickups, SUVs and CUVs rose 3.8% while cars saw a commensurate decline of 7.2%. This balance has seen a massive 4-point swing year-over-year. Four points may not seem huge, but that represents more than a half-million vehicle transactions moving from the car to the truck column. Trucks represented 61.2% of units sold in September.
Your ESA Car Keys recap follows.
SEPTEMBER 2016 HIGHLIGHTS
Wards Auto and NADA MarketBeat
- September SAAR: 17.65 units
- September Units: 1.428M vehicles sold
- Change: DSR* -0.7% | Volume -0.7% vs September 2015
- Gainers (by Volume): Nissan +4.9%, Hyundai +4.1%, Subaru +3.5%, Toyota +1.5%
- Laggards (by Volume): Ford -8.4%, VW -7.8%, FCA -1.1%
*DSR: Daily Sales Rate. A more reliable indicator of the pace of auto sales which accounts for actual car-selling days per month.
*SAAR: Seasonally-Adjusted Annual Sales Rate.
SOURCES: Wards Automotive InfoBank, NADA MarketBeat, Automotive News.
Dave Eckstein is a Partner in the firm ESA & Company. He specializes in highly profitable market share growth for local businesses and gets a kick out of demonstrating a declining cost of customer acquisition. He plays baseball, but isn't that Dave Eckstein.