If we think back to early 2014, there was skepticism around the automotive industry and whether or not sales would recover from a slow start during severe winter weather. Also in early 2014, analysts and journalists across the industry wondered how much longer the U.S. could sustain an overall accelerated pace of new car sales as the industry inched toward prerecession levels.
Well, if there was any doubt left, December certainly shut the door on doubters, at least for now.
How it wrapped up
Consumers were more confident in the economy as the books closed on 2014. This, combined with lower fuel prices and holiday deals, led to a strong December in the automotive industry. New car sales topped 1.5 million in the U.S. during December, which was an 11% increase over December 2013. Here's a breakdown of the five largest automakers in the U.S., and how their sales gains stacked up:
Table by author. Data source: Automotive News.
Starting from the top
Fiat Chrysler Automobiles' (FCAU +0.00%) sales in December reached 193,261, which was an industry-leading 20% improvement over last year's December. FCA's sales for the full year topped 2 million units to record the automaker's best full-year sales performance since 2006. Looking at a wider picture, it was its 57th consecutive month of year-over-year sales gains and its fifth consecutive year of annual sales growth -- not too shabby.
FCA's industry-leading month, at least in terms of gains compared to last year, was clearly led by two brands: Jeep and Ram.
Jeep had 80% of its vehicles post December sales gains, compared to last year's December, of 16% or higher. Furthermore, three Jeep models posted their best December sales performance ever, which led to the Jeep brand posting its best December as well. Not to be outdone, FCA's very important full-size Ram truck posted sales gains of 32% last month, capping off a very solid 2014 as the truck gained market share on its two major competitors, the F-Series and Silverado.
Sales of the 2015 Colorado will be worth watching, one way or another. Image source: General Motors.
Photo finish
Nipping at the heels of FCA's 20% sales gain over last December was General Motors (GM 1.41%) with its also-impressive 19% gain. In fact, GM's Chevrolet, GMC, and Buick brands each increased last month, compared to last year, by 21%, 23%, and 32%, respectively -- it was only Cadillac that failed to post a sales increase, down 11% in December.
Five GM vehicles posted their highest December sales ever, and seven vehicles recorded their best full-year sales in 2014. Despite not posting their best December sales, the two most important points of vehicle sales data came from GM's full-size trucks. The Silverado and Sierra haul a huge amount of profits for the automaker, and both posted respective December sales gains of 36% and 31% compared to last year.
Looking beyond the numbers revealed an interesting statistic for General Motors and its investors. GM has posted 27 consecutive months of year-over-year average transaction prices, or ATPs. Part of this could be because more consumers are taking longer loan term agreements, which pushes up the overall price. However, part of the increase in GM's ATPs is its fresher lineup, which is certainly a positive.
Falling behind?
Ford Motor Company (F 1.03%) certainly lagged behind the two industry leaders in terms of sales gains, as it barely managed to register a 1% gain in December compared to the prior year. Ford's sales actually declined for the full year, narrowly missing a total of 2.5 million units. However, Ford's slowing sales story goes beyond the numbers, as most investors know. It's been repeated ad nauseum that 2014 is a building year as Ford cranked out new vehicles, and a fresher lineup will sell better in 2015 and beyond. With that said, there were certainly some highlights in Ford's sales data.
Consider that Ford's Escape and Fusion sold very well all year long. In fact, those two models did something only Ford's F-Series has done since 2004, which was break the 300,000 annual sales mark. Furthermore, during the conference call it was noted that nearly a third of Escape sales were of its premium titanium trim, which drives ATPs and margins higher.
That's primarily because of the SUV downsizing trend. According to Ford, as consumers continue to downsize into a small to midsize SUV, they have refused to give up the options and amenities found in larger vehicles -- boosting the titanium trim sales.
Speaking of higher transaction prices, and fatter margins, Ford's struggling Lincoln luxury brand posted a December sales increase of 21% -- mainly due to the all-new MKC, which wasn't selling last December. Still, for the full year, Lincoln's sales were up 16% to 94,474 units, which was the brand's best year since 2008.
Last, but certainly not least, is Ford's all-important F-Series. Ford's most important product once again led the U.S. in sales and remains the best-selling overall vehicle and full-size truck for the 33rd and 38th consecutive year, respectively. Despite sales remaining essentially flat year over year, sales of the F-Series topped 74,000 units last month -- an extremely strong month.
Graph by author. Data source: Ford Motor Company.
Looking ahead, many analysts continue to wonder aloud how long new car sales can remain at this level. At least one person believes strong sales are here to stay, for now. "The industry finished last year on a high note thanks to a strong economic tailwind," said Bill Fay, general manager of the Toyota division, according to Automotive News. "That momentum should continue in 2015 and combined with continued strong replacement demand, boost sales further."
