A Poor Month for Carmakers?
Feb 10th 2014 11:56AM
Updated Feb 10th 2014 11:58AM
Last year was largely a year of recovery for the industry, as pent-up demand combined with heavy incentives to boost sales. But, after so many good reports coming out of the automobile industry, a misstep was bound to happen.
Kicking off the year, most major carmakers fared badly in January, partly due to poor weather in many key U.S. regions. Along with a broader market correction, carmakers dipped on the latest figures. Let's take a look at the numbers from Ford , General Motors and Toyota .
Sales cooling off
According to most major carmakers, the extreme winter weather in the U.S. was a serious drag on sales. Overall, the industry posted a 3.1% dip in sales year over year, with only a few manufacturers bucking the trend. Analysts believe the poor performance will lead to some more pent-up demand, and with it, a sales bounce in the coming months.
Ford, GM, and Toyota all felt the chill, with the overall market reporting its first monthly sales drop since August 2010. Somehow, Chrysler managed to avoid the slowdown, posting its best January in six years with Jeep brand sales up an impressive 38%. Poking fun at its larger rivals, the company stated that "the bad weather only seemed to affect our competitors' stores...".
While the extreme weather across much of the U.S. cannot be blamed for the entire industry's pullback, analysts seem to agree that it played a big part in the decline. Many believe that January's poor sales performance is setting up for a big pop in February and March sales, and that the industry is still on track to sell over 16 million units this year.
Ford, GM, and Toyota
Ford had a rough January, with sales down 7.1% to 154,644 -- missing analyst estimates of around 157,441 vehicles. Ford brand sales were down 8.4%, with even the wildly popular F-Series pickup posting a decline. Lincoln brand sales were a bit of a surprise, up 42.5% boosted by demand for MKZ sedan and MKX crossover. Ford continues to spend a lot of money on incentives, up 14.6% versus a decline at Chrysler and GM.
GM's results were even worse, with a hefty 12% drop in overall sales. As with Ford, GM's management mainly blamed the poor weather for the drop in sales, as new models did not offer buyers enough encouragement to venture out into the cold. All four of its U.S. brands posted a drop in sales, although the company has stated it still plans to meet its full-year targets.
Toyota, the world's No. 1 car maker, also posted some disappointing numbers. Total sales were off 7.2% to 146,365 units despite a strong showing from its SUV division. SUV sales were up some 15.3%, while car sales of the top three models fell a whopping 18.5%. Truck sales also declined, down by around 4.8% as strong Tundra sales failed to compensate for a stiff drop in the Tacoma brand of pickups. Toyota's luxury car division, Lexus, had a fairly decent month, with sales rising 5% on strong demand for the new IS line.
The bottom line
The three major carmakers posted poor January sales, due to extreme winter weather across most of the country. GM led the decline, but the others weren't far behind. However, most analysts believe there is little reason to worry, as weather-related issues usually even out during the rest of the year. The industry looks on track to surpass sales of 16 million vehicles in 2014, which would make it the best year since 2007.
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The article A Poor Month for Carmakers? originally appeared on Fool.com.Daniel James has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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