What a weird world we live in. Sales of U.S. light vehicles were down almost 3% in June at a time when sales of SUVs and full-size trucks continue to be strong. As sales of passenger cars nose dive, import brands such as Honda, Toyota and Nissan -- long connected at the hip to sales of fuel-efficient passenger cars -- managed to post sales gains. The U.S. market is a weird place and eerily similar to the twilight zone with those results.
With the first half of 2017 in the books officially, let's take a look at the June highlights from Detroit's "Big Three" automakers: General Motors (NYSE:GM), Ford Motor Company (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU).
Starting from the top, General Motors' total sales declined 4.7% to 243,155 units during June. With the exception of Buick, which posted a 16.4% sales gain, all of GM's four brands posted declines, marking another slightly weaker month as this sales cycle plateaus. Chevrolet, GM's highest-volume selling brand, declined 6.4% down to 169,842 sales, while GMC and Cadillac declined 3.6% and 11.8%, respectively.
Despite the overall decline, GM's crossovers and utilities were up a combined 22% during June, on a retail sales basis, compared to the prior year. That's obviously good news for investors because as the industry plateaus in total sales, a focus on a more profitable mix will be a key component to posting better quarterly and annual results.
And, as you would expect, with sales of SUVs and trucks remaining strong, GM's average transaction prices (ATPs) have moved higher. According to J.D. Power, GM's incentive spending in June remained in-line with the prior year, 12% of ATPs, and the latter price-tag figure jumped $400 per vehicle to $35,657.
"U.S. total sales are moderating due to an industrywide pull-back in daily rental sales, but key U.S. economic fundamentals clearly remain positive," said Mustafa Mohatarem, GM chief economist, in a press release. "Under the current economic conditions, we anticipate U.S. retail vehicle sales will remain strong for the foreseeable future."
Ford Motor Company
Similar to its crosstown rival, Ford's SUV sales put forth a solid effort to offset a decline in passenger car demand, but ultimately fell short. Ford's passenger car sales declined a staggering 23% to 52,731 units, while meager gains from its truck and SUV segments, up 1.2% to over 97,000 units and 77,000 units, respectively, couldn't bring the total higher compared to the previous June. Ford's total sales declined 5.1% down to 227,979 units last month.
Also similar to its crosstown rival, Ford's average transaction pricing jumped $1,800 during June, which was far above the industry average of $520. That was driven in large part to Ford's F-Series, which posted another phenomenal month. Sales of the F-Series jumped nearly 10% to 77,895. Remember, any month above 50,000 is considered a solid month, and the F-Series' ATP jumped $3,100 during June, more than twice the segment average.
One thing for investors to keep an eye on is Ford's fleet sales. The Dearborn automaker generated 33.2% of its total sales through fleet segments during June, which is basically on par with its first-half rate of 33.6%. Unfortunately, while the fleet business is more profitable than it once was, these are still less profitable sales -- and 33% is still much higher than Ford's historical average. For comparison's sake, General Motors' fleet sales generated only 16.6% during June, and remain under 20% year to date -- this is a major discrepancy.
Fiat Chrysler Automobiles
FCA's sales in the U.S. market fell 7.4% during June, and there weren't too many bright spots within the automaker's data. Its sales fell to 187,348 units last month, which marks the tenth consecutive month of year-over-year declines as the company has struggled to post gains with one of its most crucial brands: Jeep.
Investors know that FCA's Jeep and Ram brands have long kept the lights on for the automaker, but Jeep has also failed to post a sales gain for 10 consecutive months, and the iconic SUV brand's sales dropped another 11% last month. On the bright side, FCA's Ram brand has continued to do well. The brand reported its 71st consecutive month of sales increases, which is a testament to how strong the full-size truck market continues to be in the United States. Ram posted a 6.5% sales rise in June, which also benefited from strong respective increases of 19% and 27% from its ProMaster and ProMaster City commercial vans, respectively.
At a time when Detroit autos are struggling to increase sales, despite strong SUV and full-size truck markets, it'll be more important for investors to watch inventory levels, average transaction prices and incentive spending, among other things. Those three factors will be crucial to maintain bottom line growth in this environment. Stay tuned as automakers are on deck for second-quarter calls later this month.