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USA First Half 2016: Is this the first soft landing in a decade?

Ford F-150 Raptor USA June 2016Ford’s average incentives per vehicle are up 35% year-on-year in June.

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Recently, the U.S. new light vehicle market has been on a rollercoaster, freefalling 36% in two years between 2007 and 2009 to then surge back up 65% in the past six years, hitting an all-time record in 2015 at 17.47m units. But so far 2016 shows signs of the first soft landing in a decade. Volumes were down 6% in May, the SAAR (Seasonally Adjusted Annualised Rate) was down 2% in June and as a result sales are up to arrive at a six month tally up a very shy improvement at +1.5% to 8.644.920 units. U.S. sales are clearly peaking, and some analysts are starting to wonder whether 2016 will in fact mark the 7th consecutive annual growth everyone was dead-certain about at the start of the year. The worst news: retail demand is evaporating, with LMC Automotive recently cutting its 2016 retail forecast by 100.000 units to 14.2 million.

The tyranny of financial markets has prompted manufacturers to resort to increasingly risky – and less profitable – ways of maintaining volume growth. One is “punching” – dealers buying vehicles from their own inventory, later converting them into testers or loaners in order to earn bonuses. BMW, supposedly the #1 luxury brand in the U.S. in 2015, was under the spotlight earlier this year when IHS Automotive discovered their sales were in fact below both Mercedes and Lexus. It turned out BMW offered $1.000 bonuses per car on November 30 and then $3.000 on December 31 to dealers selling vehicles to themselves as a “specialty demo” in order to snap the #1 luxury spot, with success.

Richard Davis, CEO of Bancorp, admitted in June that the auto loan market is overheated with sub-prime loans increasing their share in the past year, although his company is focusing on prime lending, he says. According to TrueCar, incentives up 9% year-on-year in June to $3,116 per vehicle on average across the industry. Ford incentives are up 35% to $3,516, BMW up 22% to $5,235, FCA up 21% to $4,101 and the Volkswagen Group up 16% to $3,585. This incentive inflation is not generalised though, with Honda down 4% to $1,845 per vehicle, Nissan down 6% to $3,208, Hyundai down 14% to $2,133 and Subaru down 20% to a minuscule $616 per vehicle.

Toyota RAV4 USA June 2016. Picture courtesy motortrend.comIt’s out with the cars, in with the trucks in the U.S. The Toyota RAV4 is up 16%.

The slow seepage from passenger cars towards light trucks (crossovers, SUVs and pickups) has become a stampede in 2016. Halfway through the year, passenger cars are bleeding down 7.5% to 3.644 million units. Small cars are down 8%, midsize cars are down 5.5%, luxury cars down 13% and large cars down 39%. The image is an almost perfect mirror in positive territory when it comes too light trucks, up 9% overall to hit a round 5 million deliveries. Pickups are up 7% to 1.279m units, SUVs up 5% to 0.866m and crossovers up 9% to 2.315m.

General Motors remains the dominant force in the U.S. market but sees its sales drop 4% to 1.439m units, mainly due to a much-adverstied shift away from low-profit daily rental sales that is starting to get a little tired as the only explanation for skidding volumes. Ford on the other hand improves by a robust 4% to 1.345m sales but Toyota is down 3% to 1.198m and now threatened by FCA Fiat Chrysler Automobiles up 6% to 1.152m and celebrating an incredible 75 consecutive months on year-on-year gains in June. Nissan is reaping the benefits of and reapplying lessons from its stunning success in neighbouring Mexico where it is #1: the Japanese group posts the biggest increase of any large group (+8%) to overtake Honda (+5%). Hyundai-Kia (+3%) follows, while the Volkswagen Group (-7%) is passed by Subaru, handicapped by the impact of the emissions scandal that has plagued its namesake brand down 15%.

Jeep Renegade USA June 2016. Picture courtesy caradvice.com.auJeep sales are up another 17% so far in 2016.

Brand-wise, Ford is up 4% to 1.292m sales and improves its share to 14.9%, vastly increasing its advantage over Toyota at 1.009m and Chevrolet at 1.007m, both at -4% although Toyota has passed Chevy. Once again, the best performer in the Top 25 is Jeep soaring 17% to a record 468.131 deliveries and on a streak of 33 consecutive year-on-year monthly gains. As it celebrates 75 years of existence this week, Jeep adds two nameplates into the Top 60 best-sellers: the Renegade (#50) and Compass up 80% (#57), alongside the Cherokee (#21), Grand Cherokee (#22), Wrangler (#23) and Patriot (#37). Other marques posting double-digit year-on-year gains include Ram (+11%), Lincoln (+13%), last swan Scion (+51%), Land Rover (+13%), Volvo (+25%) and Jaguar (+40%) with Tesla the best performer of all at +62% to an estimated 16.500 units and the Model X SUV making its first appearance just outside the Top 200. At the other end of the scale, Mini (-17%), Chrysler and Fiat (-19%) disappoint. Other brands on an impressive sales gains streak include Audi (80 months), Ram (59), Subaru (55), Volvo (19) and Scion (10).

Model-wise, the Ford F-Series is easily headed towards a 35th consecutive year at #1 which would mean 40 years in a row as the best-selling pickup in the U.S. It has overcome supply issues that plagued the career start of the new gen F-150 last year and is now getting ready to see its redesigned heavy-duty variants (F-250/F-350) hit the market. So far in 2016, the F-Series is up 11% to 395.244 units whereas the Chevrolet Silverado is actually down 1% to 273.652 and the Ram Pickup is up 9% to 231.405. Despite the GMC Sierra gaining 6%, GM’s full-size pickups are outsold by the F-Series at 380.118. In the same segment, the redesigned Honda Ridgeline has landed at #135 in June but the Nissan Titan is still very discreet (#188). Meanwhile, the mid-size pickup segment is sizzling again: the Toyota Tacoma is up 7%, the GMC Canyon up 16%, the Chevy Colorado up 23% and the Nissan Frontier up 29%. Ford must resuscitate the Ranger asap.

Honda Civic USA June 2016. Picture courtesy caranddriver.comThe new Honda Civic has hit a nerve: +20% and #2 passenger car. 

It may be a tad harder for the Toyota Camry to hold onto the #1 passenger car title for the 15th year in a row and the 19th time in the past 20 years. Although in the lead so far with 199.760 sales, it drops 7% year-on-year and is now under intense pressure from a revived Honda Civic up 20% to 189.840 units. Note the Civic has never been the best-selling car in the U.S., a title it has been holding for the past 18 years in Canada. The Toyota Corolla (-4%) is hit full frontal by the Civic, yje Nissan Altima disappoints with a 0.4% gain in spite of a new model and the Honda Accord outpcaes the market at +9% in 8th position overall.

Next is the fight for the title of most popular SUV in the country, surprisingly tense this year. Boosted up 16% to 165.900 units by its facelift, the Toyota RAV4 spectacularly takes the lead, toppling the Honda CR-V, long time leader but now down 2% to 159.075 and also threatened by the Ford Escape up 6% to 155.378 and the Nissan Rogue up 10% to 148.883. Other impressive gainers close to the top include the Nissan Sentra (+16%), Chevrolet Malibu (+25%), Ford Transit (+36%), Hyundai Tucson (+66%), Kia Sportage (+76%), Dodge Grand Caravan (+94%) and Chrysler Town & Country (+42%) – both models heavily discounted as the Chrysler Pacifica hits the market at #153 and 10.189 sales.

Previous post: USA June 2016: Trucks pull market up 2% but SAAR is down

One year ago: USA 1st Half 2015: Nissan Rogue, Chrysler 200 & Chevy Colorado game changers

Full H1 2016 Top 15 groups, Top 40 brands and Top 300 models below.

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