Please ensure Javascript is enabled for purposes of website accessibility

This Detroit Automaker Was Left in the Dust Last Month

By Daniel Miller - Oct 5, 2017 at 7:20AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With its iconic SUV brand slowing down in 2017, it's no surprise this automaker fell behind its closest competitors in September.

"Better late than never." That's likely what many investors thought about the automotive industry's first sales gain of the year, when it was announced that September light-vehicle sales moved 6.3% higher compared to the prior year. The industry's seasonally adjusted annualized sales rate (SAAR) reached 18.58 million last month, which was even better than the optimistic forecasts. And while Ford Motor Company (F -3.38%) and General Motors (GM -5.05%) posted strong September results, Fiat Chrysler Automobiles (FCAU) continued to struggle.

Here are some of the highlights and takeaways from each Detroit automaker.

Ford Motor Company: 222,248 units (8.7% increase)

Ford delivered good news when it noted the recoveries in Houston and in Florida were moving quickly, helping to drive replacement demand and strong results for September. While fleet sales spiked 25.1% to 52,704 units, retail sales also posted a strong 4.4% gain to 169,544 units. Furthermore, Ford's fleet sales may have jumped over 25%, but the segment only generated 23.7% of its September sales, which is below its year-to-date 29.8% rate. Ford was also able to trim its days' supply of gross stock inventory down from 81 days' worth at the end of August to 72 days' at the end of September.

Row of cars at a dealership lot

Passenger car sales remain weak. Image source: Getty Images.

Investors looking for Ford highlights can't miss the F-Series results. The truck line sold more than 82,000 units last month, for a 21.4% gain, a sales volume only topped in two other Septembers in company history. It was a ridiculously strong month for the truck, and F-Series average transaction prices jumped $2,300 compared to the prior year.

Not to be outdone, Ford's other large vehicles, its Ford-brand SUV segment, gained 8.8% at retail last month -- the Escape, Edge, Explorer, and Expedition all posted retail gains. This was the segment's best performance since 2003.

General Motors: 279,397 units (11.9% increase)

General Motors was similar to most automakers with its segment trends: Crossover deliveries soared 43%, and trucks were up a healthy 10%; these were enough to offset a 11% decline in cars. GM's Chevrolet brand was the runaway hero for Detroit's largest automaker, recording its best September since 2004. Total Chevrolet deliveries were up 17.4%, driven by the Equinox and Traverse, up 69% and 104% at retail, respectively -- the best September in history for the Equinox and the best month ever for the Traverse. The automaker's bread-and-butter Silverado deliveries were up 21.7% during September, driven by a 14% increase at retail.

Management continues to lessen the automaker's focus on fleet sales; year to date, GM has the lowest daily-rental mix, historically the least desirable fleet channel, of any full-line automaker at 8.7% of total sales. Retail deliveries accounted for 80% of GM's total sales, leaving fleet to generate a historically low 20% of its September sales.

One of the major discussion points throughout the year was GM's inventory levels: During many months they remained near 100 days' supply, which is unusually high. GM made it clear it intended to work down its inventory over the summer, and days' supply declined from 88 days' supply at the end of August to 76 days' supply at the end of September. That should be enough to calm investors.

Fiat Chrysler Automobiles: 174,266 units (10% decline)

FCA attempted to put a small positive spin on its September results, noting its retail sales last month were up year over year, even if the increase was a meager 0.3%.

There were a couple of driving forces behind FCA's disappointing September sales figure -- especially disappointing considering the uptick in industrywide sales. One factor was that, similar to other Detroit automakers, the company has focused less on fleet sales. In fact, FCA's fleet sales were down a massive 41% compared to the prior year, to 27,362 units, which accounted for a modest 16% of its total sales last month.

Another major factor limiting FCA's sales growth in 2017 has been its Jeep brand, which is facing much tougher comparisons after recent years of double-digit growth. An impressive 75% surge in Compass sales could save the Jeep brand from a 4% decline last month. As Jeep is FCA's best-selling brand in the U.S. market, that weighed on overall results, even if it was a slight improvement over its 12% year-to-date decline. With Jeep posting weaker September sales results, investors looked to its Ram brand, but Ram couldn't make up any ground and posted a flat sales result compared to the prior year.

September marks FCA's 13th consecutive month of U.S. sales declines; it's difficult to see how that trend turns around as auto sales peak, fleet sales narrow, and Jeep struggles to gain more traction.

All in all, it was a solid month for the industry. It's clear Detroit automakers are focused on improving their sales mix to favor retail over fleet, selling down previously higher inventories and enjoying a continued surge in larger-vehicle demand.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.
Ford Motor Company Stock Quote
Ford Motor Company
$11.13 (-3.38%) $0.39
General Motors Company Stock Quote
General Motors Company
$31.76 (-5.05%) $-1.69

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.