Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Is Cold Weather Bad for Car Sales?

By Daniel B. Kline - Mar 5, 2014 at 2:00PM

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

Two of the big three U.S. automakers had a bad January followed by a bad February. Both are blaming the weather.

While a positive for sales of lip balm, hot chocolate, and those hats that look like an animal, the impact of extreme winter weather is not as clear for the auto industry.

Ford ( F -3.67% ) and General Motors ( GM -2.15% ) are blaming bad weather for slow January and February U.S. car sales. But that poor weather did not seem to affect Chrysler, which had improved sales for the month.

Chrysler reported that its sales grew by 8%, giving it the best January the company has had since 2008. In reporting the numbers, the company even took a swipe at its competitors.

"The bad weather only seemed to affect our competitors' stores as we had a great January with sales up 8% and achieved our 46th consecutive month-of-year-over-year sales increases," said Head of U.S. Sales Reid Bigland in a press release.

Chrysler continued that momentum in February, reporting an 11% increase and the best February sales the company has had since 2007, and Bigland actually credits the poor weather for helping. "The severe weather has been ideally suited for our legendary Jeep 4x4 capability as Jeep brand sales were up 47% and the brand had its best February sales ever," he said in the release.

How bad were Ford's sales?

The weather giveth, and the weather taketh away. In January Ford's U.S. sales were down 7% from a year ago.

"Given the difficult weather in our largest sales regions, we are fortunate to have held in at retail as well as we did," said John Felice, Ford vice president, U.S. marketing, sales and service, in a press release. "In areas where the weather was good, such as in the West, sales were up. The poor weather also had an impact on the timing of some of our fleet deliveries."

In February, Ford sales were down 6% from a year ago, but the company sees reasons to be hopeful.

"Sales surged in the final week, providing us momentum after a slow start to the month," said Felice via press release. "Ford Fusion continued its strong retail sales performance in the West, outpacing the mid-size sedan segment. F-Series and Lincoln also continued to perform well."

How bad were General Motors' sales?

General Motors saw its total U.S. sales plunge by 12% in January, which it blamed at least partially on the weather.

"Historically, January is the industry's lowest sales month of the year. Extreme winter weather in the South, Midwest, and Northeast this January further depressed GM and industry sales," the company wrote in a release.

GM also saw February sales fall 1% compared with a year ago -- at least a less disastrous drop than the one in January.

"Weather continued to impact the industry in February, but GM sales started to thaw during the Winter Olympic Games as our brand and marketing messages took hold," said Kurt McNeil, U.S. vice president of sales operations, in a release. "Car and crossover sales were particularly strong at Buick and Chevrolet, and we continue to have a strong mix of pickup sales.

Is weather really to blame?

2013 was a tremendously strong year for the auto industry, with Ford posting an 11% gain in sales, Chrysler growing sales by 9%, and GM posting a gain of 7%.

Analysts have said auto sales will see continued but slower growth in 2014, Fox Business reported. For January, Kelley Blue Book recently projected that sales would rise 1.6% compared to January 2013. Edmunds.com was looking for a modest decline of .6% across the industry.

Kelley Blue Book senior analyst Alec Gutierrez told Fox Business that his company saw a weather impact in its data, explaining that sales were slower in northern states compared to the West Coast.

"I fell like weather played some role," he said of the January results.

Cars are not restaurant meals

If snow stops you from going out to eat on a Saturday night you might not go spend the money you would have at the restaurant once the weather clears. Some impulse retail and restaurant sales are just lost when bad weather gets in the way.

In general that is not the case for car purchases as people buy cars because they need them, feel it's time to replace their vehicle, or have paid off a previous car loan. A car not purchased due to snow, ice, or other severe weather is likely a purchase delayed, not canceled.

It seems likely that since the same factors that fueled an excellent 2013 for the U.S. auto industry are still in place -- low interest rates, pent-up demand, and an improving economy -- that 2014 will ultimately recover. That should be obvious when March numbers are reported, unless the poor winter weather continues (which it has for at least some of the country) or by April's numbers at the latest.

If those months show gains and bring totals for the year closer to the predicted small gains, the auto industry can rejoice. If they don't, then it wasn't the weather at all. It was that customers weren't looking to buy in the first place.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Ford Motor Company Stock Quote
Ford Motor Company
F
$19.14 (-3.67%) $0.73
General Motors Company Stock Quote
General Motors Company
GM
$59.71 (-2.15%) $-1.31

*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 service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

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

Our Most Popular Articles

Premium Investing Services

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