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U.S. truck, SUV sales stay strong in February, but at a price | Reuters

By Bernie Woodall and Nick Carey

DETROIT February U.S. auto sales, an indicator of consumer spending, fell slightly even as automakers stepped up discounting to sustain sales, major manufacturers reported on Wednesday.Demand for cars, sport utility vehicles and pickup trucks in February was expected to dip 1 percent from a year ago, and reach a still robust annualised pace of 17.5 million vehicles, down from 17.7 million a year earlier.Shares in the Detroit automakers, General Motors Co (GM.N), Ford Motor Co (F.N) and Fiat Chrysler Automobiles NV (FCAU.N) (FCHA.MI) all rose as the broader market soared more than 1 percent [.N].However, analysts pointed to caution flags in the latest results, including discounts that hit 10 percent of the average selling price for February, according to three companies that track vehicle pricing."With the industry at 10 percent you are in a push market," said Mark Wakefield, head of the North American automotive practice for consultancy AlixPartners. "This is top cycle stuff." In a push market, manufacturers try to unload vehicles, rather than respond to the pull of consumer demand.The challenge now for automakers is to avoid over-producing vehicles or launching a price war that could undermine profits, especially as rising interest rates make it more expensive to subsidize loans and leases, Wakefield said.

"It's that fine balance," he said. "How much can I push the boundary without prompting a reaction that pulls all of us down?"The tension surfaced in another round of sniping on Wednesday between GM and Ford over which one was more dependent on discounts to prop up pickup truck sales. On the plus side for automakers, U.S. consumers continued buying more SUVs and pickups, which generate higher profits.

Mark LaNeve, Ford's U.S. sales chief, said the industry's split for the month would be 65 percent trucks and SUVs and 35 percent cars. In 2016, that split was 59.5 percent in favour of trucks and SUVs, according to Autodata Corp.February sales were mixed for the major automakers. GM beat most analysts' expectations with a 4.2 percent gain in new vehicle sales.Ford sales declined by 4 percent, with its F-Series pickup trucks up 9 percent, SUVs rising 6 percent but cars sliding 24 percent from a year ago, the automaker said.

Toyota Motor Corp (7203.T), No. 3 in U.S. sales volume, suffered a 7.2 percent drop as sales of the company's best-selling model, the Camry sedan, dropped 15 percent. Fiat Chrysler Automobiles NV (FCHA.MI) (FCAU.N) sales fell 10 percent, as its largest volume Jeep SUV brand dropped 15 percent.Nissan Motor Co (7201.T) beat expectations on a 3.5 percent gain, led by a 54 percent surge for its Rogue small SUV.Honda Motor Co (7267.T)(HMC.N) sales rose 2.6 percent, helped by its trucks and SUVs, gaining 12 percent from a year earlier. (Editing by Jeffrey Benkoe)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Mar 02, 2017 01:00 AM

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