Retail Auto Sales-Troubling Trends for Big 3
As we wait for the February auto sales and word of whether or not foreign automakers will pass 50% market share in the U.S. for the first time ever, there's another number to watch. It's retail auto sales. In other words, sales from auto dealers. No fleet sales to rental car companies, government organizations, corporations, etc. This number is a more accurate reflection of consumer demand and of what makes, models, etc. are selling or not selling.
Over the last two years, J.D. Power's Power Information Network has been tracking retail sales, and the trend is troubling for General Motors . In January of last year, GM lead retail sales with 22% market share. Toyota was a distant number 2 at 17.1%. A year later, Toyota has closed the gap and is now just 1.1% behind General Motors.
Why do I point this out?
Primarily because it goes to the heart of the problem for General Motors. Yes, it's overall sales are dropping because the company has decided to cut back on low profit-margin fleet sales. But aside from fleet sales, the number of GM cars, trucks and SUV's being sold at dealerships is also dropping. THAT is a concern. Now, some of that can be attributed to GM pulling back on incentives. If the dealers are throwing less cash on the hood, it's always going to be tougher to finish some sales. But there is a broader concern that GM's retail sales are hurting because the product line is not as strong. Personally, I think GM has stepped up it's game with the revamped Saturn line-up and the new line of pick-ups and SUV's have vastly improved interiors. So what's the problem? According to the most recent sales information from Autodata, Pontiac sales dropped 35.9% in January. While Buick and Chevy were down 30 and 14.5% respectively. Some of the declines are with models that appear to be losing their steam (the Pontiac G-6) while others are with models that will soon be updated (Chevy Malibu). But collectively, General Motors decline in retail sales is one Bob Lutz and his team of auto designers have to address.
So when the Auto Sales come out tomorrow, don't just look at the bottom line, look further at the retail sales:
Tonight during "On The Money" at 7 pm ET, we will have the first results of the Consumer Reports annual survey of auto reliability. The results are interesting, trust me. You will be intrigued to see who is improving, and also who ranked dead last. Watch for it tonight.
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