Category: Economy

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Economy Industry Trends

Headwinds – or Smooth Sailing?

Eric Fifield Chief Sales Officer EFG Companies
Contributing Author: Eric Fifield Chief Revenue Officer, EFG Companies

Many toasted the end of 2017 with a collective “Whew – we made it!”  The year was one of contradictions. If you are feeling a bit whipsawed – you’re not alone. From political gains/losses to cultural uprisings, there was no shortage of news.

With 2017 in the rear-view mirror, here are a few data points that characterize the tumultuous year.

  • Sales of light trucks and SUVs finished strong while sedans bumped along the bottom of the market metrics.
  • While gas prices increased, and even spiked regionally during last year’s natural disasters, improvements to gas mileage efficiency and lighter body stylings helped buffer the impact.
  • Even though the major OEMs saw overall sales declines, the final numbers were still the fourth highest since the end of the Great Recession.
  • OEM incentives reached record highs, and the volume of lease returns spiked. But used car inventory continued to tighten as the year’s natural disasters prompted the need for replacement vehicles.
Source: Wall Street Journal
Source: Wall Street Journal
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Economy Industry Trends

Are Today’s Vehicles and Buyers Mismatched?

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

On October 3, General Motors made an announcement that many in the retail automotive space had been anticipating.  GM reported a 12 percent year-over-year increase in total sales in September to 279,397 units, driven by a 17 percent increase at Chevrolet and a nine percent increase at GMC. Crossover deliveries were up 43 percent and trucks were up 10 percent. Passenger cars were down 11 percent. Retail deliveries, which accounted for about 80 percent of sales, were up eight percent for GM’s best September retail performance since 2007. Not to be outdone, Ford Motor Co. said its sales rose nine percent, with a 21.4 percent increase in its F-150 pickup truck.

Some of this strong growth can be directly attributed to the recent natural disasters from Hurricanes Harvey and Irma. Economist Jonathan Smoke at Cox Automotive has said that 600,000 vehicles lost to the hurricanes in Texas and Florida will need to be replaced. Sales prompted by prior weather disasters generally increase within two months of the start of the recovery.

But there is more to this story. While truck sales have surged, passenger cars are down across the board, minus Toyota whose sales rose 15 percent thanks to the redesigned Camry sedan. So this begs the question – why are car sales stalled? Car manufacturers continue to throw money at the problem, offering incentives of over $3,500 per vehicle. Could the retail lot inventory be mismatched for consumer demand?

Continue reading “Are Today’s Vehicles and Buyers Mismatched?”
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Economy Industry Trends

Perspective on the Auto Sales Plateau

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

It’s official. Auto sales have plateaued. Dealerships across the U.S. are reporting low sales numbers in comparison to last year. Manufacturers have increased incentives, but no one’s taking the bait. These headlines give reason for pause and contemplation on the future of the retail auto market. But, let’s take a step back for a second.

According to Automotive News, the auto industry sold 17.5 million vehicles last year, representing a seventh straight year of growth. When put in that perspective, a plateau at 17.5 million vehicles doesn’t seem too bad.

Yes, vehicle sales aren’t hitting manufacturer projections, but seriously, how long did they really think sustained growth was going to continue? We’ve been in one of the longest economic expansions in U.S. history; the economy was bound to slow down at one point.

With that perspective in mind, economic indicators continue to be strong.  National unemployment has hit its lowest level since May 2007. We’ve seen strong jobs gains in recent months. According to CNN, wages rose 2.5 percent in the past 12 months, and the median price of a home has risen to $236,400. Lastly, consumers are still taking on debt. According to the Federal Reserve, consumer credit rose 4.8% annually in February.

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