As Black Friday has continued to become a huge event for consumers and retailers, automakers have decided they want their fair share of the fun, too.
"Five years ago, Black Friday was not even in our category," John Felice, Ford Motor Company (NYSE:F) U.S. sales chief, said in an interview with Bloomberg. "Now it's like the last week after Christmas, which accounts for half of industry sales in December."
The automotive industry picked a good time to push Black Friday deals on vehicles, with consumers' confidence in the economy growing, gasoline prices on the decline, and cheap credit available for big-ticket purchases. November was the automotive industry's second-strongest monthly performance since the recession, with the seasonally adjusted annual rate reaching 17.2 million vehicles.
Disappointment from the Blue Oval?
Ford's total sales dropped 2% in November to 180,000, compared to last year, which trailed the overall industry's 5% gain. There are really two factors behind Ford's continued slide in sales this year: vehicle launches and a decline in rental business.
Investors headed for the door as early as January, when Ford warned that 2014, and its launch of 16 new or significantly refreshed vehicles, would lead to lower profitability in the near-term. For context, 16 new launches in the U.S. is more than three times what Ford launched last year, and more than double what it will roll out next year.
While Ford's 2% decline in November isn't inspiring, investors should also consider what impact the company's pullback from rental business is having. Consider that Ford's year-to-date sales into rental business is down more than 40,000 units -- and keep in mind that sales to daily rentals are typically the least healthy and profitable of fleet sales. Those 40,000 units would be 1.8% of Ford's overall brand sales, which more than accounts for the brand's 1.2% sales decline through November, compared to 2013.
Furthermore, despite sales of Ford's most profitable F-Series trucks declining 10%, or roughly 6,450 units, the average transaction price rose $2,100, with a $350 increase in incentive spend. Using an estimated $10,000 profit per truck, that means Ford would have lost $64.5 million in profits, because of the sales decline of 6,450 units, while the increase in profitability per truck of $1,750 ($2,100-$350) generated $103 million extra in profits from this November's roughly 59,000 in unit sales. So, while Ford is losing some market share while transitioning to the new 2015 F-150, each sale was much more profitable this November than it was last year.
Not too shabby
General Motors recorded its best November sales in seven years, with deliveries reaching nearly 226,000 vehicles. GM's November deliveries were up 6% compared to last year and were partially driven by higher fleet sales -- retail sales were up 5% and fleet sales were up 11%. GM's 6% year-over-year gain in November was second only to one major automaker -- we'll get there in a second.
Looking at the four brands under the GM umbrella, GMC and Buick posted respective 23% and 27% gains over last year, to 43,854 units and 19,143. Chevrolet managed a 3.2% gain for deliveries to reach nearly 150,000 in November. The disappointment continues to be GM's luxury lineup, as Cadillac posted a 19% decline to 13,148 units in November, compared to last year.
Perhaps the biggest bright spot for GM investors was the fact that sales of its full-size trucks surged higher. GM's Silverado and Sierra sales were up a respective 24% and 57% in November compared to last year.
While Fiat Chrysler Automobiles trails Ford and GM in overall sales, it reported a 20% increase in sales compared to last November, to 170,839 units sold, which was a substantially higher growth rate than that of any other major automaker -- no other major automaker managed to achieve double-digit sales increases. Last month marks FCA's best November sales performance since 2001 and was the 56th consecutive month of year-over-year sales gains for the automaker.
Eleven FCA vehicles set records for the month of November, but two of the most impressive gains came from Chrysler's 200 and the Ram Truck. Chrysler's 200 posted a 155% year-over-year sales increase to 14,317 units sold in November, marking the 200's best monthly performance of the year and third best since 2010. Not to be outdone, the Ram Truck's 21% gain over last year set it up for its best November sales performance in company history, with nearly 36,000 units sold.
Leading the charge
Jeep was another strong brand performance for the automaker, with its overall sales up 27% in November compared to last year. It's been a recurring theme for those following FCA and its Jeep brand this year; Jeep has set a sales record in each month this year and an all-time sales record in May.
FCA certainly has a long road ahead to meet its ambitious goal to expand sales 60% globally over the next five years, but if it can export the success its brands are having here in the U.S., its future looks brighter than it has in a long, long time.
Overall, investors can expect the automotive industry to keep posting strong sales given easily available credit and more consumers with job security, and on the back of fresh vehicle launches.