Patrick T. Fallon—Getty Images
By Alex Taylor III
July 11, 2014

The first half of 2014 has unfolded in unpredictable ways: House majority leader Eric Cantor lost a primary election, the U.S. soccer team made it to the Round of  16 in the World Cup, and  “Game of Thrones” was actually bloodier than the year before.

And so it went in auto sales: Many results were unexpected. In an overall economic environment that was surprisingly positive, some segments, brands, and manufacturers glistened while others faltered. Despite being battered by an epidemic of recalls, General Motors (GM) posted better sales than expected, while Ford (F), celebrating the elevation of its new young CEO, fared worse. Sales of most luxury cars accelerated but Cadillac, a brand still in recovery, fell back. Subaru shined while Mini moped.

After looking over the numbers and reading the post-game analyses, here are some contradictions, mysteries, and surprises that confronted industry observers from January to June.

Sales: With sales running at an annual rate above 16 million cars and trucks and headed toward their best finish since 2006, optimism is the prevailing emotion. Automotive News quoted one securities analyst musing that sales might reach 18 million by 2017. Others believe that sales have peaked for this cycle and need to take a breather before heading higher. They pointed in particular at the growing popularity of six, seven, and even eight-year loans that could leave customers owing money when they go to trade in their old car for a new one.

Recalls: GM sold 267,461 cars and trucks in June, far exceeding expectations and temporarily silencing its critics. It seems that the cascade of recent announcements from GM and other manufacturers has created “recall fatigue” among new car buyers. Besides, most of the recalled cars are older models that don’t show up in new car sales.

Hybrids: The number of hybrid models has increased every year, from 2009 through this year—it now totals 47—but their market share has not kept pace, according to Tom Libby, veteran IHS Automotive analyst. Hybrid share in the first six months actually declined from last year, despite an increase in model count. Libby doesn’t say, but my guess is that the number of buyers willing to pay a premium for gas savings is shallower than expected and it will take another leap in gas prices to jump-start sales. Consumers may also be wary of hybrid mileage claims. Both Hyundai and Ford admit to publishing overly optimistic mileage claims for their hybrid models.

Trucks: Pickup truck sales are well off the pace of their peak year in 2005, says independent analyst Warren Browne, and he doesn’t see them climbing up to their former levels for another three or four years. “Unfortunately, we are not close to past peak economic realities, when real GDP growth averaged more than 3%, housing starts were above 1.7 million units and monthly paystubs allowed large-pickup intenders to become consumers,” says Browne. “We are going to have to wait until the next sales cycle, probably 2017-2018, to surpass the 2005 sales peak.” That’s bad news for the Detroit Three, for whom pickup trucks are an outsize source of profits.

Segments: Compact crossovers climbed another 13% to 1.1 million by Automotive News’ calculation (think Honda CR-V,) while midsize sedans shrank 3% to 1.3 million (think Toyota Camry). How long before these lines cross and baby SUVs become the most popular body style?

Sports cars: Subaru is the king of all-wheel drive vehicles and wields a big stick in rallying, but has a hard time selling sports cars. It moved 4298 copies of its BRZ, jointly developed with Toyota, while Scion’s version of the same car, called the FR-S, found 7662 buyers in the same period.

Brands: Fiat Chrysler’s Jeep saw its sales jump an almost unbelievable 45%, on the strength of the compact Cherokee introduced last year. Jeep sold 103,397 more vehicles than in 2013, 80,432 of them Cherokees. New models weren’t enough to lift FCA’s Chrysler, however. Its sales fell 14% despite the arrival of a new 200. Chrysler has been designated FCA’s volume brand, but it is currently being outsold by BMW, Mercedes-Benz, and Mazda.

Import brands: Kia, the newest full-line manufacturer in the U.S. car scene, proved again that it is a fast learner. Its first-half sales ran 7.9% ahead of a year ago—nearly twice the industry average—and they weren’t all Souls and Rios. As Edmunds.com analyst Jessica Caldwell points out, Kia’s top of the line model K900, sells for more than double the $26,000 of its range topper from a decade ago, the Amanti. I drove a $66,400 K900 last week, powered by a big 5.0 liter V-8 and loaded with advanced electronics. Except for the badge on the hood, it was indistinguishable from cars selling for $20,000 or more.

Volkswagen, which can do little wrong in Europe, showed once again that it is a slow learner when it crosses the Atlantic. Still unused to the idea that Americans like change, it has been marketing the same lineup of cars now for several years, and has seen sales fall 7% since the beginning of the year. It has vowed to speed up, but progress is slow. The seventh generation Golf coming to the U.S this fall made its debut two years ago in Europe.

Overseas markets: China continues to sizzle while Brazil cools off. Slow economic growth and higher interest rates along with, no doubt, football fever – soccer to you – kept Brazilians out of new car showrooms. Its motor vehicle sales fell 10% in June, finishing off a worse-than-expected first half in which sales fell 7.1%. That’s bad news for GM and VW, which both have big operations there. In China, the world’s largest car market, passenger vehicle sales are up 11.2 percent to 9.63 million for the first six months, though sales cooled in June. Domestic brands continue to lose ground to Western makers and now account for only a little more than one-third of the market. That’s good news for GM and VW, the two largest sellers there.

Ultra-luxury: Rolls-Royce sales boil around the world but are only lukewarm in the U.S. Rolls, which is owned by BMW, says customers in Europe and Asia boosted sales 33% in the first half to 1968. That’s in sharp contrast to the skinny increase in the U.S., where One Percenters bought only 450 Phantom, Ghosts, and Wraiths vs. 426 last year. The average Phantom owner has a net worth of $30 million, which is a good thing since the Phantom stickers for $407,500 and can be optioned up to $500,000.

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