Asian auto makers' sales down in a skewed November

Asian auto makers recorded November U.S. sales declines in a month that was expected to see significant industry drops because of a fluke in the calendar.

American Honda's sales dropped 23 percent. Mazda, Subaru, and Hyundai Motor America all fell more than 10 percent. Kia was down 5 percent. Toyota Motor North America, meanwhile, dipped just 1 percent. That performance could be considered a win given there were three fewer selling days last month than in November 2019. Despite that quirk, Sweden's Volvo managed a 20 percent increase.

Overall light-vehicle sales in November were projected to fall 12 percent, according to TrueCar and ALG. Ford Motor, Fiat Chrysler, American Honda, Nissan Motor, BMW Group, Mercedes-Benz and Volkswagen Group were expected to all record sales declines of 15 percent or more.

"It's going to look awful—like things have gone backwards pretty terribly—and that's not the case," said Tyson Jominy, vice president of data and analytics at J.D. Power.

Based on the first 17 days of the month, J.D. Power and LMC Automotive projected a 15 percent plunge in total light-vehicle sales. Adjusted for the number of selling days—three fewer than in November 2019—the drop is more like 3.5 percent, with the more lucrative retail sales slipping only 0.7 percent.

With supply limited, pricing is up. The average new-vehicle retail transaction price last month was expected to reach a record $37,099, J.D. Power and LMC projected. That's 0.9 percent higher than the previous record, set in October.

November had just 23 selling days this year—the lowest number possible in a month, and a quirk that only occurs on the calendar every five years or so—compared with 26 a year ago.

When adjusted for selling days, the market was expected to be down 3.5 percent to 7 percent. The SAAR for November was forecast to come in at 15.8 million to 16.4 million, according to estimates from Cox Automotive, J.D. Power/LMC and TrueCar/ALG down from 17 million in November 2019 and 16.38 million in October.

Auto maker results

The Toyota division was flat at 177,725, while Lexus deliveries dropped 6.8 percent to 28,040. The Toyota brand was buoyed by a 48 percent gain in hybrid sales, especially Highlander and Camry hybrids, as well as an 11 percent year-over-year increase in its pickup sales. The company's sedan- and coupe-laden lineup across its two brands continued to drag down sales comparisons, however, with sales of those vehicles falling another 2.4 percent in November, while sales of its light trucks declined just 0.4 percent.

The Honda brand's sales declined 24 percent as each of its car and light-truck models fell by double digits, except the Passport (down 5 percent). The Acura luxury brand fell 18 percent. Despite the decline in overall sales, American Honda's electrified-vehicle deliveries rose 24 percent.

The Hyundai brand's U.S. sales were down 9 percent, while retail volume fell 11 percent. However, deliveries rose 4 percent on a daily selling-rate basis, while retail was up 1 percent. Crossover volume, propped up by the Palisade and Venue, was up 9 percent. Cars fell 31 percent, but one key volume model—the Sonata—rose 39 percent to 8,242. Hyundai Motor America's luxury brand, Genesis, fell 57 percent to 935 vehicles.

At Kia Motors America, losses by a number of nameplates were partially offset by incremental volume from the Seltos crossover (5,122 deliveries). Sales of the K5 midsize sedan (7,437) outpaced the Optima it replaced by 13 percent. The Telluride crossover rose 31 percent to 8,993.

Suburu of America delivered 50,413 vehicles in November. Its top seller, the Outback, rose 3.5 percent to 12,921, and the Crosstrek was up 24 percent to 12,841. However, other volume models were down: Forester (25 percent), Ascent (31 percent) and Impreza (44 percent).

Mazda North American Operations reported an 11 percent decline to 21,752 vehicles. Sales of its cars were down 21 percent and light trucks fell 7.9 percent. It did gain some incremental volume from the CX-30, which had 2,649 deliveries compared with just 31 in November last year.

Volvo Car USA recorded its sixth straight year-over-year gain. The XC60 crossover was up 5.2 percent to 3,756 in November, topping the record it set in October. The XC40 crossover rose 67 percent to 2,344. Its large XC90 crossover dipped 0.2 percent to 3,516.

Ford Motor Co. said it would release its November sales Wednesday. The second-largest U.S. auto maker returned to monthly sales reporting in October after nearly two years of reporting quarterly. General Motors, Fiat Chrysler, Nissan Motor Co. and most European brands report only quarterly.

Signs of retail recovery

Below the seemingly dire top-line results, the retail auto market continues to recuperate from the spring shutdowns on stronger light-truck mixes and still-recovering dealer inventory levels.

Jominy said industry average transaction prices in November topped $37,000 for the first time, and were up 8.3—or almost $3,000 from the same point a year ago. Part of that boost came from a heavier proportion of sales of more-expensive pickups, SUVs and other light trucks. Inventive spending declined about $800 per vehicle from a year ago, while dealer grosses per vehicle were up about $800 year-over-year, Jominy said. Combined, they account for more than half of the ATP rise.

True Car/ALG projected average transaction prices to be up 4.7 percent, or $1,707, from a year ago, and up 2.3 percent, or $838, from October 2020.

Kelley Blue Book estimated the average transaction price fell $480 from a high in October, yet it remain $499 ahead of where they were a year ago. KBB estimated November ATP in the U.S. at $39,259, not including incentives.

Among auto makers, FCA has experienced the largest gain year-over-year in its ATPs at 6.1 percent, followed by Hyundai Kia at 5.3 percent, while Volkswagen Group, including Porsche, saw its ATPs fall by 17 percent from a year earlier, KBB said.

Sedan and coupe sales continued to lose market share in November compared with crossovers, SUVs and pickups, and now account for less than 22 percent of the overall market, down from 25 percent a year ago.

"We're quickly approaching what I call the 'Trident Line'—where 4 out of 5 consumers choose a pickup or SUV over a car," Jominy said, referencing the sugarless gum's decades-old advertising tagline. "But cars never do well toward the end of the year; they are typically strongest in the first half."

TrueCar/ALG projected retail sales to be up 2.9 percent year-over-year, and up 8.4 percent from October, on a selling-rate basis. (TrueCar sold ALG to J.D. Power in a deal that closed Monday, after the monthly estimates were released.)

Fleet sales, especially to daily rental operators, have been a drag on sales overall since the COVID-19 crisis began, but are beginning to show their first hints of recovery, Jominy said. Commercial sales haven't taken the hit that the travel-heavy rental industry endured, but as production has recovered at most auto makers, more fleet orders are being filled. "We're starting to see some signs of life from fleet," Jominy said.

Product availability at dealerships has improved somewhat, according to Cox Automotive Senior Economist Charlie Chesbrough.

"The tight inventory situation, where available products at dealerships were drawn down to very low levels, reached a peak in late summer. However, factory production has improved while sales pace has slowed, and the combination is allowing dealerships to replenish somewhat," Chesbrough said. "Overall, supply still remains far below last year's levels, and holiday sales may slow if buyers can't find what they want."

Cox's full-year forecast remains at 14.3 million vehicles, down 16 percent from 2019. It predicts retail will end the year down 9 percent, while fleet with finish down 42 percent.

The average number of days a new vehicle sits on a dealer lot is on pace to fall to 48 days, remaining below post-recession lows of 50 days for the second consecutive month, J.D. Power said.