Detroit Automakers' Sales Drive Higher in July: Investor Highlights

Detroit automakers -- and most of the automotive industry -- posted a strong July, with momentum in their favor for strong third- and fourth-quarter results.

Daniel Miller
Daniel Miller
Aug 3, 2015 at 8:03AM

It's a good time to be in the automotive industry. Consumers are feeling more confident, gas prices and interest rates remain low, and the economy is steadily improving. Those factors helped drive new-car retail sales 5.4% higher in July compared to last year. "The second half of 2015 is off to a great start, with industry sales above expectations," said Kurt McNeil, GM's U.S. vice president of sales operations, in a press release.

Sales day indeed started off with strong results from Detroit's three automakers, which are thriving as SUV sales continue to outpace passenger cars. Let's take a look at highlights from Ford Motor Company (NYSE:F), General Motors (NYSE:GM), and Fiat Chrysler Automobiles (NYSE:FCAU).

General Motors: 6% increase in July YOY to 272,512 units in the U.S.
The four brands under GM's umbrella -- Chevrolet, Buick, GMC, and Cadillac -- combined for their best July retail sales total since 2007. More important, though, is that GM's total sales were driven by higher retail sales, rather than an increase in fleet sales. GM's retail sales climbed 14% higher in July compared to last year. As GM continues to focus SUV inventory toward retail rather than fleet, its new full-size Chevy and GMC SUVs posted a 6% increase in retail deliveries and a 68% decline in fleet deliveries.

Furthermore, as Detroit automakers continue to rely on full-size trucks and SUVs for a majority of their profits, it's a good sign for investors that GM's Chevy and GMC brands sold more than 86,000 pickups in July -- GM's best figure since July 2006. The majority of that figure was driven by full-size trucks, which generate more profits than GM's recently rolled-out midsize trucks, with July sales of the Silverado and Sierra up 34% and 13%, respectively, compared to last year, to 56,380 and 19,808 units.

While GM certainly posted a strong July for investors, Cadillac sales sputtered. Total Cadillac sales in the U.S. during July were down 7% compared to last year and remain 2.4% lower for year-to-date totals. Cadillac's ATS, CTS, and Escalade posted respective declines of 38%, 26%, and 32% in July compared to last year.

Meanwhile, GM's crosstown rival Ford also posted a strong July.

Ford Motor Company: 6% increase in July YOY to 222,731 units in the U.S.
It's pretty clear that the driving force behind Ford's sales increase in July was its new vehicles. Ford's new F-150, Mustang, Explorer, and Edge have all been well received and continue to sell well. Here are some interesting highlights for investors to consider.

First, Ford's iconic Mustang posted a healthy 29% sales gain over last year's July and remains up 51% in year-to-date sales compared to last year. What's interesting, though, is that during the sales conference call, executives noted that the Mustang's all-new EcoBoost engine option accounted for 41% of the vehicle's sales nationally. That could be a really good sign, as previously, many consumers didn't consider a Mustang because of its lower fuel economy. With the smaller four-cylinder turbocharged EcoBoost option, the Mustang may have just jumped to the forefront for many car-shopping consumers who would have otherwise walked on by -- and that's great news for sales revenue.

Another good sign for sales revenue comes from Ford's best-selling vehicle in America, the F-Series. Production of the 2015 F-150 has finally hit full speed and sales have started to rebound. Ford sold more than 66,000 F-Series units, a 5% increase over last year's July, and reported that F-Series retail sales had improved 13% over the same time frame.

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On top of all that, the average transaction price of each F-Series driven off a dealership lot checked in $3,200 higher compared to last year, which is a record for the full-size truck and good news for company revenue and profits. Expect very strong third- and fourth-quarter results from Ford on the back of strong full-size truck and SUV sales.

Last but not least is the pseudo-Detroit automaker: Fiat Chrysler Automobiles.

Fiat Chrysler Automobiles: 6% increase in July YOY to 178,027 units in the U.S.
It should come as no surprise if you've been following along, but FCA posted its 64th consecutive month of year-over-year sales gains. "Last week FCA announced a 69 percent increase in second quarter profits and now we post our best July U.S. sales since 2005," said Reid Bigland, head of U.S. sales, in a press release.

It was a strong July showing across many vehicles under FCA's brand umbrella. Eight FCA vehicles set company U.S. sales records for the month of July. The brand leading the charge, however, shouldn't surprise anyone: Jeep vehicles continue to sell extremely well, and the brand's sales increased 23% in the U.S. last month, compared to last year.

FCA's Chrysler brand checked in with the next-largest gains compared to last year, albeit on lesser volume than most of FCA's brands. Chrysler's 200 drove the gains with a staggering 85% increase in July to 15,108 units sold.

The Ram Truck had an unimpressive 1% gain in sales last month compared to last year, but that's mainly because the truck is finally up against tougher year-over-year sales comparisons. The Ram Truck still sold just over 36,000 units in July and remains in a tight battle with Toyota's Camry for the title of America's third-best-selling vehicle in 2015.

July was another impressive month for new-car sales in America, a trend that is likely here to stay for the near term, and investors should expect Detroit automakers' profitability to thrive during the third and fourth quarters while sales of SUVs and full-size trucks continue to soar higher in 2015.