US light-vehicle sales gain 5.7% in March; SAAR increases to 16.3-mil.-unit pace

Detroit automakers

General Motors (GM) delivered 256,047 cars and trucks in March 2014, up 4.1% overall, after a 7% increase in retail sales, higher average transaction prices (USD34,000), and decreased incentives. The automaker noted that fleet sales were down 5% on a planned reduction of rental deliveries, offset by commercial fleet sales, which were up 5%. Buick demonstrated a gain of 13.4% on sales gains for the Regal (up 51.0% to 2,424 units) and the Encore (up 75.8% to 5,279 units). The Enclave also saw demand grow by 3.7%, while the LaCrosse fell 14.6% and the Verano fell 7.7%. Cadillac was the only GM brand to see a decline, with sales falling 6.3% to 14,765 units. ATS sales were down 16.9% to 2,982 units, and XTS sales fell 30.5%. Escalade variants saw double-digit declines as the model is being renewed for the 2015 model year. The SRX (up 23.6%) and CTS (up 4.6%) reflected gains, and the brand sold 81 ELRs. The SRX remains Cadillac's bestseller, with 5,399 units making up 36.5% of the brand's sales. Chevrolet saw sales increase 3.3% to 179,681 cars and trucks. Bright spots included the Cruze, up 14.0% to 26,521 units – the bestselling Chevrolet car. Corvette, while selling well (3,480 units in March) and showing month-on-month (m/m) gains, also showed an inflated increase compared to the changeover period last year. Sonic also picked up in double digits to 10,060 units, behind the Impala's 12,952 units sold (down 12.3%). Malibu showed a small gain of 1.8%, and the Camaro picked up 6.4%. The smallest Chevrolet, the Spark, picked up 44.6% to 5,117 units. The decline in the Tahoe and Suburban (as well as GMC Yukon and Yukon XL) is not surprising when considering that the new-for-2015 versions were still arriving in March. As expected, the Chevrolet Silverado remained the brand's highest-volume product at 42,247 units, reflecting the first increase in 2014 of 6.8%. Also in March, the Ram pick-up nudged past the Silverado, selling 42,522 units, while the GMC gained 7.4% to 41,173 units. Declines in demand were felt by the Acadia, down 16.7%, and the Yukon XL at 25.7%. The Sierra gained 22.0%, the Terrain 7.2%, and the Yukon 23.5%. The Terrain (9,059 units) outsold the Acadia (8,339 units).

At 244,167 units for the month, Ford Motor Company also saw gains in March; sales were up 3.4%, compared to a slow February (-6.1%) and January (-7.1%) results. This result is lower than the market gains, however, and a smaller increase than GM reported. The slow pace of the first two months of the year leaves the company's year-to-date (ytd) sales down 2.6%. While the first part of March continued to be impacted by weather, Ford says the month closed stronger. Ford's fleet sales grew by 3%, recovering from the weather impacts of January and February, as expected by the company. The Ford brand was up 2.6% for the month, but down 3.7% for the year. Lincoln continued to show impressive gains, up 31.4% for March and 35.9% ytd; however, this is not quite as strong as February's 36.4% gain, driving a ytd gain last month of 39.2%. The F-Series picked up 5.1% in March, with sales crossing the 70,000-unit monthly mark for the first time in seven years, and is up 2.7% for the year, with transaction pricing up USD900 and consistent incentive spending (about USD4,000 per truck). The Fusion was Ford's second-bestselling product again with 32,963 units sold for an 8.8% gain; however, the Fusion is still down 3.7% for the year. Escape sales were essentially flat from March 2013, down 0.8% for the month and 2.3% for the year at 28,701 units. Ford reports that the small-car market as a whole is down, which it attributes to pressure from small SUVs. This has affected the Focus as well. Ford's small car was down 3.8% in March and down 16.1% for the year; the monthly decline was less dramatic than earlier in the year. The C-MAX continues to see significant declines on stable gas prices, down 42.5% for the year. Elements contributing to Lincoln's high percentage gain include being compared to a short supply and sell-down in early 2013, which reflected the MKZ's 71.7% gain in March (from 2,360 units to 4,052 units) and 145.3% the year. Lincoln sales continue to rest largely on the MKZ and MKX. The Navigator saw a 21.1% gain, the MKS an 11.9% increase, and the MKT a 2.6% decline. The Navigator, MKS, and MKT combined to sell 2,336 of the brand's 8,969 units sold (26%).

Chrysler continues to see sales increases, reporting its 48th consecutive month of year-on-year (y/y) sales gains. Chrysler demand grew well ahead of the market at 13.0% to 193,915 units sold in March. The Ram pick-up continues to be the company's bestselling vehicle in the US, with sales increasing by 26% to 42,522 units; the pick-up's ytd increase is 25% with sales of 96,906 units. Ram is offering higher incentives than GM and taking market share. Ford's average incentive spend has been about USD4,000 per truck and relatively consistent for the past year. The Ram Cargo Van is being phased out by the ProMaster Van, which saw March sales of 1,106, compared to the Cargo Van's 841 units. The Fiat brand was able to report a gain over March 2013, thanks to the addition of the 500L. The brand's sales story continues much the same as in previous months. The 500 saw sales fall by 13% in March (3,316 units), but the incremental volume of the 500L (1,422 units) enabled a 24% overall brand gain for the month and 19% ytd. Chrysler brand sales fell 22.9% in March, largely on the sell-down of the exiting 200. The all-new 2015-model-year 200 began production in March; sales of the outgoing car unsurprisingly dropped 55.6% last month. The 300 saw a decline of 6%, while the Town & Country was up 14%. Jeep sold more of every model this March over last year, racking up 57,983 units sold, except for the defunct Liberty, thus registering a 47% increase. Given the gap between Liberty's end of production and the delayed Cherokee start, Jeep is poised to show strong gains across this year. Sales of the Cherokee reached 13,796 units, selling 30 more units than the Compass and Patriot combined. The Grand Cherokee saw the most notable gain, up 26.2% in March (though less than the February gain of 34%). Dodge brand sales were up 1% in March, but declines in earlier months mean the brand is still down 9% ytd. Throughout the year, Dodge sales are likely to struggle as the Avenger fades away without a replacement. Avenger sales tracked 8,756 units in March – more than the Dart's 6,135 units – reflecting a 24.2% decline in the newer sedan's sales. Challenger was the only other Dodge to see a decline, falling 20%. The Charger (15%), Journey (25%), Caravan (27%), and Durango (22%) all reported sales gains.

Japanese automakers

Coming off a difficult January and February, Toyota saw a 4.9% increase in March 2014, but is down 1.6% ytd. Toyota's results are also lagging the market's 5.7% March and 1.4% ytd gains. The Toyota division saw a gain of 2.5%, while the Lexus brand gained 23.3%. Unlike February, Toyota-brand dealers sold more cars (103,888) than trucks (82,867). Toyota maintains its claims of being the number one retail brand and expects strong April sales. March sales at the Toyota Division were dominated by the Camry and Corolla; their combined sales of 71,638 units made up 38.4% of overall sales. Camry was the only Toyota-branded car to see a gain, up 11.4%; Toyota cars were down 2.9% for the month. The declines were less dramatic than in February, however. The Yaris fell the most, down 24.6% to 1,805 units; the Corolla dropped only 1.5%. Meanwhile, the Prius is still seeing sales falls, down 16.1%. The Avalon, which had reported a 42% decline in February, saw demand soften by 14.8%. SUVs performed well in a cold and snowy March, gaining 18.7% overall. The RAV4 was up 19.8%, Highlander 14.3%, 4Runner 53.2%, and Land Cruiser 16.2% – even the FJ Cruiser reported a 94.2% gain as Toyota phases the product out this year. However, the ageing Venza fell 22.1%.

It was a good month for trucks at most brands. The Tundra picked up 25.0%, while the Tacoma dropped 5.0%. Scion continues to struggle, down 80% overall. However, the Scion tC (up 14.0%) showed a gain and the brand's decline was less dramatic. The Lexus's y/y gain in March of 23.3% brought Lexus sales to 28,593 units for the month; Lexus displayed a ytd gain, up 14.4%, despite a difficult quarter industry-wide. Of that, cars continue to outsell SUVs and accounted for 57.3% of the brand's sales. The newer IS, being compared with a sell-down month, showed another triple-digit gain, while the higher-volume ES saw flat sales of 6,784 units. The CT facelift arrived, along with increased marketing efforts, and helped the model to see a 39.2% gain. The GS also recorded a gain of 32.0%. Lexus' truck nameplates picked up 19.6% to 12,206 units. The GX gained 143.4% to 1,874 units while the higher-volume RX saw demand increase to 9.8%.

Demand for Nissan and the Infiniti picked up 8.3% in March to sell 149,136 vehicles – less than the 15.8% gain demonstrated by Nissan in February and outselling Honda for the second month this year. Nissan grew at half the rate from February, seeing sales climb 7.9% in March to 136,642 units. The largest gains were reported from the Juke (77.3% at 6,943 units) and Sentra (38.4% at 19,323 units). Altima saw a 4.9% drop to 35,921 units, and was unable to outsell the Camry for a second month, but was the bestselling Nissan. Versa showed flat sales in March (-0.7%), not quite reversing February's 21.5% decline. The Leaf sold 2,507 units in March to pick up 12.1%. In terms of Nissan trucks and SUVs, the Rogue continues to sell well, up 26.3% to 19,420 units. The Titan saw a significant drop of 36.9%, selling only 1,314 units, while the Xterra (down 26.8%) and Pathfinder (down 13.0%) both returned a sales decline. The NV truck saw a 15.9% gain to 1,645 units, while the smaller NV200 reported strong sales of 1,090. Murano (8.7%) reversed February's decline, while the Quest picked up sales by 15.9%. However, the Murano dropped 2.5% and Armada 21.6%. The Infiniti gained 12.5%, with the Q50 (3,795 units) and QX60 (3,340) the bestselling products. Still, the Q50's sales in March 2014 are less than the G sedan sales in March 2013 (4,530), which the Q50 replaced. Meanwhile, the QX60's volume reflects a 26.9% gain. While Nissan's Armada saw flat sales (up 1.0% to 1,321 units), its QX80 twin gained 28.2% to sell 1,241 units.

American Honda sales of 133,318 reflected a decline of 2.0% y/y in March 2014 and 3.6% ytd; the Honda division saw a 3.4% decline (117,738 units), while the much smaller Acura division's sales increased by 10.5% (15,580 units). Honda's bestselling vehicle remains the Accord, but as March sales declined 7.0% to 33,962 units, it remained behind the Camry and the Altima. The CR-V (28,657) outsold the Civic (27,697), with a pick-up of 6.5% compared to flat sales for the Civic. Odyssey sales at 11,008 units were flat in March. Honda's hybrids also saw declines, though total HEV sales reached only 2,466 units in March, only 2.1% of Honda Division sales. Acura saw sales increase 10.5% to 15,580 units in March. The brand's sales continue to be dominated by their MDX and RDX, which accounted for 66.6% of sales. MDX sales reflected an 80.6% increase and the RDX an 18.2%. In the car lineup, only the RLX recorded a sales increase to 387 vehicles. Acura's bestselling car is the TL, which will be replaced by the TLX in fall of this year, which may cause Acura's car lineup to struggle in 2014.

Mazda did not see a gain in the month as many other automakers did, but instead returned flat sales (+0.3%) for a total of 34,903 units. The CX-5 remains the brand's bestseller with 11,855 sold in March and an increase of 66.6%. The Mazda3 saw flat y/y sales, but has experienced a 17.4% ytd decline to 24,056 units sold through the first three months of 2014. Gains from the Mazda2 and MX-5 Miata enabled the car line to show a 2.9% increase for the month; the increased sales of the CX-5 offset declines in the CX-9 enough that Mazda's trucks showed an increase of 19.9%.

Subaru continues to demonstrate record sales, with its best first quarter in history, and highs for the Forester and XV Crosstrek. Sales increased by 21.2% in March to 44,479 units; the company's ytd total is 112,388 units. The Legacy saw a decline of 26.5% as Subaru prepares a new generation, with the sedan introduced in February 2014 at the Chicago Auto Show and the Outback reveal scheduled for the New York Auto Show. By contrast, the Outback saw a 12.2% gain in March to 11,729 units. The Forester held out as the brand's bestseller with a 53% sales increase to 13,846 units. Subaru sold 6,585 XV Crosstrek models for a 40.5% increase.

Other automakers

Overall, Volkswagen (VW) Group sales in March 2014 were flat compared to March 2013, reflecting only a 0.74% gain. The struggling Volkswagen brand saw a y/y sales decline of 2.6%, selling 36,717 units in March 2014. Audi gained in March by 7.5% to 14,246 units and 3.0% ytd to 35,228, with gains in A6, A7, Q5 and Q7 offsetting declines for the A4, A5, A8, and all-road. Porsche picked up 9.2% for a record March of 3,808 units sold. Combined sales for Hyundai and affiliate Kia, which operate separately, recorded a 3.7% increase for March 2014. Hyundai showed a smaller decrease of 1.9%, while Kia gained 11.5%. Hyundai's vice-president of sales continued to blame the weather, but expects gains from the final two weeks of March to carry into April. Kia's strongest seller remains the Optima, followed by the Soul, while Hyundai sales of Elantras and Sonatas were strongest; in March, the Sonata picked up 6.8% while the Elantra saw sales fall 17.7%.

Outlook and implications

As expected, March 2014 sales improved after a difficult start to the year, and most OEMs reported that sales strengthened throughout the month, though it remains true that throughout 2014 OEMs will need to manage expectations against a more modest growth year and comparisons with a high 2013. Inventories have increased dramatically, leaving companies well-stocked for the return of buyers and spring sales, and for incentives.

March light vehicle sales picked up from the slow January and February results. On a seasonally adjusted annual rate (SAAR), March sales sprung forward at a 16.3-million-unit pace, a rate over 1 million units stronger than the previous month's results. The surging March sales helped to boost the first-quarter selling rate to an average of 15.6 million units, even with the volatile fourth quarter 2013 results. For March, automakers pointed to a very strong close to the month, with sales picking up over the last two weekends, likely motivated by incentives. IHS expects these incentives to remain present in the market throughout the spring clearance selling season, which should help to assist demand levels in the second quarter.

There were 26 selling days in March 2014, one less than the year-ago period. On a unit volume level, 1.53 million light vehicles were sold, which is growth of 5.6% compared to year-ago levels, and thus reversing the y/y sales declines of the first two months of 2014. This has resulted in a first-quarter sales volume of 3.74 million units, up almost 50,000 units y/y.

With the exception of Honda (down 2.0%), all manufacturers took part in the March sales surge. Once again, market sales were paced by the strong light truck sales of Fiat-Chrysler, which realised a 13.0% y/y increase for the month. Nissan also continued its strong first-quarter performance with sales up 8.3%, while Subaru (up 21.2%) sustained its recent momentum. The top three manufacturers continued to underperform compared to the overall market as sales at GM (up 4.1%), Ford (up 3.3%), and Toyota (up 4.9%) were below the market growth pace for the month. Hyundai-Kia (up 3.7%) and the VW Group (up 0.7) may have improved sales compared to last year, but continue to forfeit market share.

Light truck sales continue to dominate the landscape as full-size pick-ups and a weather-induced preference for all-wheel and four-wheel-drive utility vehicles pushed sales throughout the quarter. Through the first three months of 2014, light truck sales are up over 130,000 units compared to last year, while passenger-car sales are down over 85,000 units. For the month, total passenger-car sales were down 0.1%, while light truck sales were up 11.6% and accounted for 51.7% of light vehicle demand, compared to a 48.9% share realised in March 2013.

With the stronger sales pace in March 2014, month-end vehicle stocks for the industry decreased compared to the month-ago level, although Detroit manufacturers' inventories were mixed. Month-end inventory in the US for Ford was 680,000 units, down 17,000 units from last month; Fiat-Chrysler's inventory also shrank, down 20,000 to 526,000 units. At GM, inventory rose 10,000 units to 815,000 units as the stock of light trucks crept up.