Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



A Poor Month for Carmakers?

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 (NYSE: F  ) , General Motors (NYSE: GM  ) and Toyota (NYSE: TM  ) .

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.

Be patient and retire with wealth
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 10, 2014, at 4:36 PM, NoVaEarly wrote:

    Funny. The bad weather didn't seem to hurt Subaru. They had their best ever January sales of 33,000 vehicles, a 19.3% increase over January 2013. They even saw an increase in their "sporty" car the BRZ from last year of 27.9%

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2832346, ~/Articles/ArticleHandler.aspx, 9/5/2015 6:21:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Daniel James

I'm primarily a value and fixed-income investor with a background in cultural anthropology. As a writer for the Fool, I focus mainly on the consumer goods sector, also dabbling in technology occaisionally. When not pouring over the world's stock markets, I like to read, travel and make music.

Today's Market

updated 9 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:00 PM
F $13.56 Down -0.28 -2.02%
Ford CAPS Rating: ****
GM $28.88 Down -0.23 -0.79%
General Motors CAPS Rating: ***
TM $116.50 Down -3.11 -2.60%
Toyota Motor Corp… CAPS Rating: ***