Ford Rides Trucks to Surprise Gain as Rivals Start Year Ice-Cold

(Bloomberg) -- Auto sales got off to a frosty start to the year, with all major carmakers except Ford Motor Co. reporting weaker numbers than expected.

Ford deliveries rose about 7 percent in January, buoyed by strong demand for pickups, according to people familiar with results the company no longer makes public on a monthly basis. General Motors Co. joined Nissan Motor Co. and Toyota Motor Corp. in posting bigger declines than analysts estimated in a Bloomberg News survey.

Fiat Chrysler Automobiles NV and Honda Motor Co.’s gains trailed projections, and both companies blamed the cold.

“In spite of some frigid January weather, we remain bullish on 2019 given the continued underlying strength of the U.S. economy,” Reid Bigland, Fiat Chrysler’s head of U.S. sales, said in a statement. The automaker’s only brand to grow for the month was Ram, with a 24 percent surge in truck and van deliveries.

The annualized industry sales rate slowed to 16.7 million last month, according to researcher Autodata Corp., trailing analysts’ projection for 16.9 million. The pace of car and light truck deliveries was 17.1 million in January 2018.

“With the cold weather that’s hit, particularly this week, as well as the government shutdown that we had a little bit earlier, it has slowed things down a little bit,” Henio Arcangeli, senior vice president of automotive operations for Honda’s U.S. unit, said in a phone interview Thursday. “Our sales were very strong in the beginning of the month.”

Getting Costly

Auto demand is likely to shrink in 2019 as borrowing costs rise and make it tougher for consumers to afford ever-costlier new vehicles. The average interest rate on new cars jumped to 6.2 percent last month, from 5 percent a year ago, according to car-buying researcher Edmunds.

Surging sales of sport utility vehicles and trucks more than made up for a 1.7 percent decline in passenger cars at Ford, said three people familiar with company’s results. GM suffered a hangover from a December sales promotion, the people said. The company also dialed back on rebates more than other automakers, according to Jim Cain, a GM spokesman.

Analysts surveyed by Bloomberg estimated total sales declines of 1.5 percent for Ford and 3.7 percent for GM.

“It seems like Ford and others had more fleet than we expected,” Jeff Schuster, senior vice president of forecasting for LMC Automotive, said by phone. “Retail sales were deteriorating during the month even before the weather got bad.”

Less-Sweet Incentives

Many carmakers cut back on incentives in January after attractive year-end promotions, so a decline was bound to happen, said Mark Wakefield, who’s based in Detroit and is the head of consultant AlixPartners’ automotive practice.

The red-hot Jeep brand had its first monthly drop since December 2017. Parent Fiat Chrysler cited freezing-cold conditions in the Midwest and Northeast.

“In contrast to previous months when Jeep was the champ, Ram saved the day,” said Michelle Krebs, an analyst at Autotrader.

Fleet Trends

Fiat Chrysler put up weaker-than-expected numbers despite selling 50 percent more vehicles to fleet customers in the month. About 23 percent of the company’s January deliveries went to fleets, up from a 16 percent share a year ago.

Read more on Fiat Chrysler’s pivot back to fleet sales

Nissan was undermined by a 40 percent plunge in sales of Altima sedans. That’s a bad omen for auto executives who’ve said passenger cars may be bottoming out after falling to a record-low 30 percent share of the market last year.

Chilling temperatures and a push to pare back on deliveries to fleets were factors in Nissan’s drop, according to Billy Hayes, a division vice president for the company’s North American unit.

“We had many stores either completely shut or working with a skeleton crew or skeleton hours,” Hayes said. “There’s no doubt the weather had an impact.”

--With assistance from Chester Dawson.

To contact the reporters on this story: David Welch in Southfield at dwelch12@bloomberg.net;Gabrielle Coppola in New York at gcoppola@bloomberg.net;Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Melinda Grenier

©2019 Bloomberg L.P.