Major U.S. automakers gave their investors a small victory in March.
New-vehicle sales were expected to decline, which has only happened six times in year-over-year comparisons since 2009. That's mainly because March 2014 was a very strong month filled with pent-up demand after the harsh winter receded and consumers were out and about. Also, March 2014 had five weekends, but March of this year had only four.
However, on Wednesday the automotive industry reported it had eked out a 0.5% gain in U.S. new-vehicle sales, totaling 1,545,710 units. That delivered a seasonally adjusted annual rate of 17.1 million, much stronger than March 2014's 16.4 million.
With the 10,000-foot industry view out of the way, let's dig into the highlights and lowlights of the sales performance for Ford Motor Co. (NYSE:F), General Motors (NYSE:GM), and Fiat Chrysler Automobiles (NYSE:FCAU).
Fiat Chrysler Automobiles, or FCA, was the biggest winner among these three major automakers in new-vehicle sales gains, but not overall volume. FCA increased year-over-year sales by 2% last month, for a total of 193,915 units sold. That increase extended FCA's impressive streak of year-over-year sales gains to 60 consecutive months.
One key factor in FCA's incredible gains in recent years has been the resurgence of its Jeep brand. Jeep sales were up 23% last month, which marked the brand's best monthly sales performance in history. If you follow auto sales, that shouldn't be a surprise, because Jeep has been setting records every month lately.
A highlight for the automaker that perhaps many overlooked was the Chrysler brand sales increase of 15%. Chrysler has trailed the sales gains of the Jeep and Ram brands, but the Chrysler 200 increased sales by 155% in March, in a highly competitive midsize segment to boot.
General Motors is still king of the hill among the Detroit automakers when it comes to total volume, selling nearly 250,000 vehicles last month. However, sales were still down 2.4% compared to last year's March. Even more telling was the driving force behind the fall: a 5% increase in fleet deliveries and, more significantly, a 5% decline in retail sales. Essentially, this means GM's sales declined and its sales mix between fleet and retail was worse than last year's March, because retail sales typically carry better margins than fleet sales.
While the numbers weren't pretty, there was some good news as well.
GM's most important vehicle, its highly profitable and best-selling full-size truck, the Chevy Silverado, delivered a 7% sales gain last month. Sales were up 17.6% through the first quarter. Its sister truck, the GMC Sierra, managed a 3.2% gain last month and has increased sales by 7% through the first quarter.
Furthermore, GM's total sales of trucks, vans, and SUVs rose 14% from March 2014, and crossovers were up 6%. That effectively means the vehicles GM makes big profits on are selling very well. On the flip side, will that offset the 21% decline in GM's car sales last month? We'll see come GM's first-quarter presentation later this month.
Somewhere in the middle
Ford's total sales of 235,929 units last month was a 3.4% decline from March 2014. While that was the worst decline of these three automakers, analysts had forecast Ford's sales to decline by a much deeper 5.4%.
Remember GM's increase in fleet sales and decrease in retail sales last month? Well, Ford did the opposite: It posted a 1% gain in retail sales and a 13% decline in fleet sales. Ford's sales decline in March is largely due to the fall in fleet sales; that's easily explainable, as Ford is entirely aiming the supply of its best-selling vehicle, the F-150, which was redesigned for 2015, toward retail customers and will supply fleet demand later when production reaches full speed late in the second quarter.
To further emphasize how the F-Series inventory is being split between fleet and retail, consider that total F-Series sales were down 4.6% yet retail sales were up 10%. Constrained supply is also keeping dealerships from offering incentives on the vehicles, which boosted average transaction prices by $2,100 per F-150 last month.
While this is Ford's fifth sales decline in seven months, almost one-third of the automaker's total sales are made to fleet customers that buy in bulk. Ford can't afford to use its limited inventory of its newly redesigned F-150 to supply fleet customers. If these sales declines continue into the third quarter, it will be a red flag for investors to investigate further.
Ultimately, all major automakers faced a tough comparison in March, and investors should take the minor gain in industrywide U.S. sales as a small victory. Keep an eye on retail sales throughout 2015 as total sales approach pre-recession levels to better understand the health of the industry as we move forward.