U.S. light-vehicle sales fell at Toyota, Hyundai and Kia last month, in line with forecasts for what is expected to be a weaker February with fewer selling days as the industry slowly recovers from the pandemic.
Toyota Motor Corp. volume dropped 5.7 percent, with deliveries down 6.6 percent at the Toyota division but up 1.4 percent at Lexus. The Toyota brand was hurt by a 17 percent decline in car volume, an ongoing weak spot across the industry as Americans migrate to crossovers and other light trucks.
Combined car sales at Toyota and Lexus fell 16 percent while light-truck demand edged down 0.3 percent.
Volume dropped 8.8 percent at Hyundai and 7.9 percent at Kia in February, the companies said Tuesday. Hyundai, which has enjoyed strong consumer demand for an expanded crossover lineup, said retail deliveries slipped 2 percent last month, with fleet off 47 percent.
Mazda said U.S. sales dropped 8.4 percent last month, with car demand off 17 percent and light-truck deliveries down 6 percent, though CX-30 and CX-9 volume rose.
Sales jumped 51 percent at Genesis, with deliveries of the new GV80 utility vehicle — 1,283 — topping combined volume of the brand’s three sedans.
U.S. light-vehicle deliveries are forecast to fall 9 to 11 percent across the industry in February, in part because of 2 fewer selling days and 1 less weekend of sales.
February is usually one of the weakest months for sales but the market continues to rebound from the economic shocks of the pandemic, analysts say. Severe weather in parts of the country, notably record cold temperatures across Texas and the south, also disrupted the market last month.
“Texas accounts for nearly 1 out of every 11 vehicles sold, so the short-term impact on sales from this event will be felt,” said Charlie Chesbrough, senior economist at Cox Automotive. “However, it’s likely only a blip in the overall sales picture, as sales are expected to recover for the quarter.”
Hyundai and Kia were also hobbled by an extended computer network outage last month that upended sales and financing deals.
Randy Parker, head of national sales for Hyundai Motor America, said consumer demand remains strong and predicted sales will bounce back in areas affected by weather over the next several months.
Honda Motor Co., Subaru and Volvo are expected to report February sales later Tuesday. Ford Motor Co. will release results for the month on Wednesday.
SAAR outlook
The seasonally adjusted, annualized rate of sales is forecast to come in 15.5 million to 16.3 million, based on estimates from J.D Power/LMC, TrueCar and Cox Automotive. That would be down from February 2020’s 17 million rate and the 16.83 million pace tallied in January.
Retail demand has driven the recovery, even amid tight stockpiles, as the economy continues to rebound from the pandemic. But inventories remain under pressure because tight microchip supplies have forced many automakers to idle assembly plants.
The average number of days a vehicle sat on a dealership lot before being sold last month was 53, J.D. Power said, down 18 days from February 2020.
Incentives
With inventories declining and retail demand strong, automakers and dealers continue to dial back on incentives. TrueCar estimates incentives averaged $3,356 last month, down 20 percent from Feb. 2020. (See chart below.)
Odds, ends
- There were 24 selling days last month vs 26 in Feb. 2020.
- The average incentive was tracking at $3,562 per vehicle in February, a decrease of $614 from the year earlier period, J.D. Power said. Incentives as a percentage of average MSRP stood at 8.2 percent last month, down two percentage points from Feb. 2020, and the seventh straight month below 10 percent.
- Average transaction prices are forecast to rise 6.6 percent, or $2,366, to $38,075, according to TrueCar.
- Fleet volume is projected to tally 231,100 units last month, down 25 percent from February 2020 on a selling day adjusted basis, Power said. Fleet shipments are forecast to to account for 19 percent of all light-vehicle deliveries, down from 25 percent a year ago.
Quotable
“We’re seeing fleet recovery slow down significantly year-over-year. February is typically a big month for fleet sales, but the continued reduction in travel by consumers is delaying fleet recovery. This may be a sign that manufacturers are beginning to triage the ongoing microchip shortage by further pulling back from fleet and reallocating toward retail to help limit inventory shortages.”
— Nick Woolard, TrueCar analyst
“While the ongoing strength of the sales rate is impressive, the transaction prices and profitability of those sales is nothing short of remarkable. The combination of strong retail sales, higher transaction prices and smaller discounts means that February 2021 likely will be one of the most profitable Februarys ever for both retailers and manufacturers.”
— Thomas King, president of the data and analytics division at J.D. Power
