SUVs sell at torrid pace in April

Honda, Nissan have record month; most others gain

A Nissan Titan pickup rolls off the Nissan Canton Vehicle Assembly line in Canton, Miss., in this April file photo. Nissan’s sales in April rose 12.8 percent.
A Nissan Titan pickup rolls off the Nissan Canton Vehicle Assembly line in Canton, Miss., in this April file photo. Nissan’s sales in April rose 12.8 percent.

DETROIT -- America's love of pickups and SUVs helped push most automakers to healthy sales gains last month as Honda and Nissan reported best-ever April sales. Ford posted record SUV sales, while Toyota broke a record for SUV and truck sales.

Honda led major automakers with a 14.4 percent sales increase as both its cars and SUVs sold well, while Nissan's sales rose 12.8 percent. Fiat Chrysler was up 6 percent on record Jeep sales, and Ford rode an April record for SUV sales to a 4 percent increase. Toyota sales rose 3.8 percent largely because of the RAV4 small SUV, which broke a monthly record with sales up nearly 32 percent.

"Considering that April is typically the calm before the storm of summer sales, there's every reason to believe that 2016 will be a year for the history books," Jessica Caldwell, director of industry analysis for Edmunds.com, said in a recent report.

General Motors, Volkswagen and Hyundai were the only major automakers to report sales declines. General Motors blamed its 3.5 percent drop on a strategy of cutting low-profit sales to rental car companies. Volkswagen sales fell almost 10 percent as its emissions-cheating scandal continued. Hyundai sales were off 8.5 percent from a record April last year.

Ford Motor Co. said it sold more than 65,000 SUVs, the best April in company history, led by the Explorer with a 22 percent increase. At Nissan Motor Co., cars and SUVs pushed sales up, while Fiat Chrysler was led by a 17 percent increase in sales of Jeep SUVs. It was Fiat Chrysler's best April since 2005.

"Consumer preference for SUVs and pickup trucks continued unabated in April and helped to propel us to our strongest April sales in 11 years," Reid Bigland, head of U.S. sales for Fiat Chrysler Automobiles, said in a statement. "Both our Jeep and Ram Truck brands recorded strong year-over-year sales gains last month."

"I think it's full steam ahead," said Rebecca Lindland, senior analyst for Kelley Blue Book, who doesn't see any economic forces that would cause car sales to slow. Lindland said consumers are pulling sales up, and automakers aren't creating demand with wild incentives or crazy lease deals like they have in the past.

Kelley Blue Book is forecasting sales to be flat from last year's record 17.5 million, but Lindland said they could even fall off a bit as General Motors and other automakers reduce sales to rental car companies. Still, she said, retail sales to individual buyers would be up, and that is healthy for the auto industry.

Regardless of whether sales keep growing, the overall pace of growth is slowing. Two years ago, for example, April sales jumped 8 percent, or double last month's expected pace. J.D. Power and Associates predicted that April sales this year would run at an annual rate of 17.6 million.

The U.S. may be the lone bright spot in an otherwise sluggish global economy as American consumers continue to buy expensive new vehicles at record levels.

"It's a very nice rebound from the softness we saw in March," said Jeff Schuster, senior analyst with IHS Automotive in Troy, Mich. "The U.S. economy is set up pretty well to weather the global slowdown. The next several months will be the real test."

For now, the sales outlook is still sunny. But there are some worrying trends for the industry.

Buyers are flocking to SUVs and trucks, which might force manufacturers to discount cars to move them off lots. That's good for buyers in the short term, but incentives can flood the market with cars and hurt resale values.

At Fiat Chrysler, car sales fell 8 percent for the month. Sales of the Chrysler 200 midsize car tumbled 60 percent to around 7,600. Ford's car sales fell 12 percent. Hyundai's two top-selling cars, the compact Elantra and midsize Sonata, each saw big sales declines. Elantra sales were down 44 percent while the Sonata was off 15 percent.

Although car sales are dropping overall, Lindland doesn't see big price wars developing because many auto factories can now switch easily from cars to SUVs. Many SUVs are built on the same underpinnings as cars.

Some cars bucked the downward sales trend. Sales of General Motor's all-new Chevrolet Malibu and Honda's new Civic each rose nearly 25 percent.

Sales to individual consumers also appear to be slowing, so automakers are relying more on less profitable sales to rental-car companies and other fleets. J.D. Power expected April sales to individual buyers to rise 4 percent, while sales to fleets were expected to jump 8.7 percent.

John Humphrey, senior vice president of J.D. Power, said consumers likely spent more on new cars and trucks than any other April on record. But he said slowing growth, the shift away from cars and rising fleet sales "pose significant challenges to manufacturers as they compete in the marketplace."

Information for this article was contributed by Tom Krisher and Dee-Ann Durbin of The Associated Press, Brent Snavely and Greg Gardner of the Detroit Free Press and David Welch and Melissa Mittelman of Bloomberg News.

Business on 05/04/2016

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