Phew, what a difference a year makes! Last year, dealerships couldn't bribe U.S. consumers to come out and buy vehicles in January, given the harsh winter weather -- which resulted in a really weak start to 2014. A year later, the story is reversed.
Consumers are feeling better, more people are working, the economy is improving, and fuel prices have been low for months. Add that all up, and you get a surge in new-vehicle sales in January. Here's how it shook out for Ford (NYSE:F), General Motors (NYSE:GM), and Fiat Chrysler Automobiles (NYSE:FCAU) (yes, I'm still counting FCA as a domestic automaker since the majority of its successful products are indeed from Detroit's Chrysler, and I'm stubborn).
As you would expect
It's no surprise that as fuel prices remain cheap, sales of SUVs and trucks are surging, and Detroit automakers -- which are known for producing quality SUV and trucks -- are certainly enjoying increased sales. General Motors' deliveries for the month increased 18% over last year's January, while Ford's and FCA's moved 15% and 14% higher, respectively. General Motors led its two rivals in total sales, reaching nearly 203,000 units sold last month. Ford checked in with more than 178,000 units last month, while FCA topped 145,000 units.
Ford had multiple vehicles post their best January sales in years. Even Ford's most important vehicle, the F-Series pickup truck, posted a 17% increase in units sold last month -- its best January since 2004. Also, it's a great sign that Ford's iconic Mustang had sales more than double in January, compared to last year, rising 124% -- the model's best January since 2007. Not to be outdone, Ford's Escape posted its best-ever January sales performance in the model's history and the Explorer recorded its best January since 2005.
Beyond the F-Series' surge in sales is the fact that its high-end and premium-priced trims are moving off dealership lots at an accelerated pace. The F-150 overall is being driven off dealership lots at an average of 12 days, which is a very fast rate itself, but the Platinum and King Ranch are moving at an even faster pace, spending only nine and 10 days on the lots, respectively. Look for 2015 to be a strong year for Ford, especially when production of the F-150 hits full speed by midyear.
General Motors highlights
General Motors posted its best January for sales in seven years and also saw a strong performance from its very profitable full-size trucks -- great news for auto investors. GM's pickup deliveries jumped 42% year over year last month. That wasn't a one-hit wonder, either, as the previous month also saw a 43% rise in deliveries. Sales of crossovers and SUVs were also up a very healthy 36%, which is great because as a rule of thumb for mainstream brands, the larger the vehicle, the better the profitability.
Looking beyond sales figures, investors can also be happy that GM's average transaction prices moved $2,400 higher to $34,800, compared to a year ago. Furthermore, GM achieved this without increasing its incentives and deals to consumers. In fact, according to GM, it had the lowest incentives of all domestic automakers, on an ATP basis, in 11 of the previous 13 months.
Fiat Chrysler Automobiles highlights
FCA extended its streak of year-over-year sales gains to a staggering 58th consecutive month with its Chrysler, Jeep, Dodge, Ram Truck, and Fiat brands all posting gains last month. Four of five Jeep vehicles set records last month and fueled the brand to a 23% increase, the largest of any FCA U.S. brand in January.
In fact, Jeep has just been crushing it for a while now. The Jeep brand has set a sales record every single month dating back to November 2013, driven by the popular Cherokee, Grand Cherokee, and Wrangler models. The Cherokee posted a 44% sales increase last month and was FCA's second-best-selling vehicle, trailing only the Ram pickup. In fact, if investors want to follow the success of FCA as a business, look no further than the four models -- Wrangler, Cherokee, Grand Cherokee, and Ram truck -- which accounted for nearly 50% of all FCA sales in January and almost certainly far more than 50% of profits.
It will be interesting to see how FCA fares in 2015 after torching the industry with impressive gains last year, making this year filled with tough comparisons. So far, domestic automakers look poised to take advantage of lower fuel prices that are fueling sales of SUVs and full-size trucks, and investors should enjoy the ride this year.