Detroit Autos Struggled in September, but There Were Some Bright Spots

Detroit skyline. Image source: Getty Images.

September was an unremarkable month for the automotive industry in terms of total light-vehicle deliveries, which declined 0.7% compared to the prior year, but it was still a strong seasonally adjusted annualized rate (SAAR) of 17.74 million. General Motors (GM -0.17%), Ford Motor Company (F 0.66%), and Fiat Chrysler Automobiles (FCAU) posted year-over-year declines in September, but there were still some bright spots in sales data from all three Detroit automakers. 

General Motors -- 249,795 units -- 0.6% decline

Detroit's largest automaker posted a slight sales slump last month, which has been a trend throughout 2016 as the company has focused on keeping fleet sales below 20% of its total. In terms of retail sales -- sales to individual consumers -- GM's result was a 0.3% increase over the prior year to 204,449 units. GM also noted that throughout the first nine months of 2016 it had gained 50 basis points of retail market share in the U.S., the largest retail share gain of any full-line automaker.

As for brands, Chevrolet continued to haul the largest chunk of total sales at 170,237 units, but posted a slight 0.3% decline compared to last year's September. Meanwhile, Buick posted the most impressive gain at 14.1%, but only accounted for 20,922 total sales. GMC and Cadillac checked in with a 8.7% decline and 3.1% gain, respectively.

Detroit automakers are well known for producing quality SUVs and full-size trucks, and because consumers have increasingly turned in their passenger cars for said SUVs and trucks, it's pushed average transaction prices (ATPs) higher. More specifically, GM's ATPs moved roughly $1,000 higher in September, compared to the prior year, to reach $35,804. That's roughly $5,000 above the industry average.

Despite the market for new-vehicle sales likely plateauing at the moment, GM remains optimistic about the future. "Key economic fundamentals like a strong jobs market, rising personal incomes, low fuel prices and low interest rates continue to point toward strong industry performance," said Mustafa Mohatarem, GM's chief economist, in a press release. "We think the industry is well positioned for a continued high level of customer demand into the foreseeable future."

Ford Motor Company -- 204,447 units -- 8% decline

Ford's F-Series continues to power ATPs. Image source: Ford Motor Company.

Ford's total decline wasn't as bad as it appears, thanks to fleet sales being front-loaded in 2016, which is making comparisons a bit tougher for Detroit's second-largest automaker. Fleet sales fell 21% in September, and those to daily rental companies, the least preferable of fleet sales, declined 36%. However, Ford's retail sales also posted a 4% drop during September. 

On the bright side, similar to GM, Ford's average transaction prices remain very healthy on the back of its F-Series trucks and SUVs. Ford's ATPs jumped by $1,100 last month compared to the prior year, which far outpaced the industry's average gain of $400. One of the driving forces behind the increase was Ford's all-new Super Duty, which just started to hit the dealership showrooms. The all-new Super Duty generated nearly a quarter of total Super Duty sales and posted an ATP of roughly $62,000.

Speaking of new vehicles hitting dealerships, the Lincoln Continental tallied its first month of sales reaching 775 units and spending only six days on dealer lots on average. Lincoln's retail sales increased 8% last month and remained healthier than the overall premium industry, which Ford estimated to be down between 2% and 3% in September. Lincoln's MKX continues to perform extremely well, with retail sales up 22% last month and total sales up nearly 50% year to date.

Fiat Chrysler Automobiles -- 192,883 units -- 1% decline

FCA's retail sales checked in at 146,453, with fleet sales generating 24% of its total sales, at 46,430 units. One of the highlights shouldn't come as a surprise to investors: Sales of the Ram Truck brand were up 27% in September compared to the prior year. While the Ram Truck brand sales are up 11% year to date, September was definitely a strong month, with Ram pickup truck sales up 29% and Ram ProMaster up 17%.

What might surprise investors, though, is the rare sales decline in FCA's highly popular Jeep brand. It wasn't long ago that Jeep consistently posted huge double-digit sales gains each month. That wasn't the case in September, with Jeep brand sales down 3% compared to the prior year. That overall decline couldn't keep the Jeep Grand Cherokee down, as it recorded 18% more sales last month than in last September. The Jeep Patriot also posted a strong 33% sales gain compared to the prior year.

On the flip side, FCA's Dodge, Chrysler, and FIAT brands all posted weak results for September. Dodge brand sales were down 6% while Chrysler and FIAT posted much larger declines of 27% and 30%, respectively.

As the U.S. new-vehicle market plateaus, investors will need to switch gears from focusing solely on monthly sales gains and focus more on market share, transaction prices, and incentives. It's going to be critical for automakers to keep incentives at reasonable levels. If they can accomplish that, Detroit automakers should be reporting plenty of strong quarterly profits in the near term.