Skip to Content

America Continues Its Love Affair With the SUV

November 1, 2017

Major automakers posted mixed U.S. new vehicle sales in October on Wednesday, though America’s love affair with high-margin pickup trucks and SUVs was unrelenting as passenger cars continued to be abandoned for larger, more comfortable vehicles.

General Motors (GM)reported an overall sales drop of 2.2% for the month, with consumer sales down 6.6%. High-margin pickup truck, SUV and crossover sales were all up at the largest U.S. automaker.

GM reduced its inventory of unsold vehicles in the month by 7,000 vehicles to 813,000. The automaker has been whittling away at its large volume of unsold vehicles, a source of concern for the market. GM had advised that its inventory would rise in October.

GM slightly reduced consumer discounts as a percentage of the average transaction price, to 13.5% from 13.7% in the third quarter.

Industry experts believe consumer discounts in excess 10% of the average transaction price are unhealthy for the market as they erode resale values and are unsustainable in the long term.

Industry consultants J.D. Power and LMC said last week that based on preliminary sales numbers including October, discounts have exceeded 10% in 15 of the last 16 months.

Ford Motor (F) posted a 6.2% gain in vehicle sales in October, driven largely by a 15.9% jump in sales of its popular, high-priced F-Series line of pickups. Strong demand pushed the average price tag for an F-Series truck up $4,000 from the previous October to $47,300.

High-margin pickup trucks were a dominant factor in the better-than-expected results Ford posted last week.

But Ford’s low-margin fleet sales rose 14.6% in October.

Fiat Chrysler Automobiles (FCAU) reported a 13% decline in new vehicle sales. The automaker’s sales to consumers were down 4%, while fleet sales slid 43%, in line with the company’s strategy to reduce low-margin sales to car rental agencies.

Nissan Motor’s sales increased 8.4% for the month, driven by a 12.9% jump in pickups, SUV and crossover sales. Sales of its popular Rogue crossover model soared 43% in October.

But sales at Nissan’s luxury Infiniti brand fell 8.1%, driven largely by a 16.2% drop in luxury sedan sales.

GM shares were up 0.5% at $43.21 while Ford rose more than 1.3% to $12.43 and Fiat Chrysler rose 1.7% to $17.64 in U.S. trading.