Major automakers on Tuesday posted higher U.S. new vehicle sales in September, as consumers in hurricane-hit parts of the country, in particular southeast Texas, rushed to replace flood-damaged cars.
Analysts and industry consultants had predicted that hurricanes Harvey and Irma would provide automakers with their first monthly gains in 2017. Sales had been weak sales after a strong run since 2010 that culminated in record sales of 17.55 million units in 2016.
But others warned high inventory levels and record consumer discounts remained a concern moving forward.
Most of the September sales gains came after Hurricane Harvey hit Texas. Replacing cars during the recovery in southeast Texas and Florida will boost U.S. new and used auto sales through at least November, according to industry consultants.
While the hurricane recovery drove sales, “this will be a short-lived party,” Michelle Krebs, executive analyst for online sales site Autotrader, told reporters on a conference call.
Up to 500,000 cars were damaged or destroyed during Harvey and another 200,000 cars during Irma, according to industry estimates.
Sales at No. 1 U.S. automaker General Motors Co. jumped nearly 12 percent versus September 2016 as a 43 percent increase in sales of crossovers and a 10 percent rise for pickup trucks offset an 11 percent decline for passenger cars.
GM inventory fell to 76 days supply last month from 88 days in August, a positive development since analysts have blamed the automaker for much of the industry’s oversupply of unsold new vehicles. GM is moving closer to its goal of around 70 days supply by the end of the year.
The “overall strength of the U.S. economy is the main force driving the market,” said GM chief economist Mustafa Mohatarem, with recovery in hurricane-damaged areas “spurring new and used vehicle sales.”
GM said new car sales to consumers were up 14 percent in the region that includes Texas.
Industrywide, new car sales in the Houston area, the fourth most populous U.S. city, jumped 109 percent in the three weeks after Hurricane Harvey compared with the three weeks before the storm, according to car shopping website Edmunds.
Average new car prices were up just 0.4 percent, according to consultancy Kelley Blue Book, reflecting “the industry’s trend of slowing demand for new vehicles,” said analyst Tim Fleming.
Ford Motor Co.’s (sales rose 8.7 percent in September, with those to consumers up 4.4 percent and lower-margin fleet sales up 25.1 percent. F-Series pickup truck sales soared 21.4 percent, benefiting from the popularity of pickups in Texas.
Demand in Houston was “particularly strong,” Ford’s U.S. sales chief Mark LaNeve said on a conference call. Florida was off because of the lingering effects of Irma but “was coming on strong at the end of the month.”
Toyota Motor Corp.’s September sales increased nearly 15 percent, with strong gains for SUVs and trucks. Sales of the revamped 2018 midsize Camry sedan were up 13 percent in its first full month of sales.
Honda Motor Co. Ltd.’s September sales rose almost 7 percent, with its recently revamped midsize Accord sedan up nearly 10 percent.
Toyota and Honda are betting the new sedans win market share as their Detroit rivals shift focus to SUVs, crossovers and pickups.
Fiat Chrysler Automobiles NV (FCA) reported a 10 percent decline in sales, driven by a 41 percent drop in lower-margin fleet sales. The company is cutting back on fleet sales. FCA’s sales to consumers rose 0.3 percent.
Nissan Motor Co. Ltd.’s September sales rose 9.5 percent.
Ford shares rose 2.3 percent at $12.37 and GM was up 2.8 percent at $43.32.
© 2023 Thomson/Reuters. All rights reserved.