American auto manufacturers release their April sales numbers tomorrow morning. Industry analysts, such as Edmunds.com and Kelley Blue Book, are expecting total vehicle sales for last month to hit around 1.52 million. Here are five things to watch as the reports are released.
- Will April’s numbers meet expectations?
Analysts predict that April’s seasonally adjusted annual rate for vehicles will hit around 17.5 million for the month, up from March’s rate of 16.4 million. The month of March wound up disappointing for analysts that expected a rate around the mid-17 million range. Economists say one month’s data doesn’t necessarily make a trend.
“We believe an early Easter holiday likely depressed vehicle sales in March, therefore they should bounce back in April,” said Ryan Sweet, senior economist at Moody’s analytics.
However, a second month of missed expectations could signal that auto sales are finally leveling out after record breaking numbers last year.
2. Is growth in truck and SUV sales slowing down?
Surges in SUV and truck sales were highlights for auto manufacturers for the past several months.
Low oil prices played a major factor in sales growth over 20 percent for compact SUVs and crossover vehicles in both February and March. Analysts predict April SUV and truck sales will be up 5 percent from last year, much lower than the past two months.
The national average price for gasoline has increased to around $2.14 per gallon. This number may be lower than during the recession period, but rising gas prices could make consumers a little more hesitant to purchase larger cars and trucks than they were a few months ago.
3. What is going on with America’s “Big Three” manufacturers?
Analysts forecast that General Motors will be down 2.3 percent in sales growth from last year, after reporting less than one percent growth the month before. Ford Motor Company and Fiat Chrysler expect to report sales growth around 5 percent. These manufacturers reported much stronger growth earlier this year.
However, foreign manufacturers, such as Nissan and Honda, are expecting another strong month in sales for April.
Jeremy Acevedo, industry analyst at Edmunds.com says American manufacturers saw most of their growth in SUV and truck sales for the first part of the year.
“They’re not seeing the same amount of growth there,” said Acevedo.
Now that SUV and truck sales are starting to cool, so are overall sales for America’s biggest auto manufacturers.
4. What would a strong report mean about U.S. consumers?
A cut back in vehicle purchases made a significant impact in overall retail sales in March. The Commerce Department reported a 0.3 percent decline in retail sales for the month. However, excluding auto sales, sales were up 0.2 percent.
Total retail sales have been flat for the first few months of the year and consumer spending is the main driver of the American economy.
“Retail sales have been soft, but the lack of pricing is a significant issue,” said Sweet.
Big ticket price items that can be seasonally affected, like autos, can hurt the overall the retail sales report. But a strong rebound in auto purchases could lead to a more attractive retail sales report later this month.
5. Will Volkswagen ever recover?
Volkswagen AG is expected to see another month in the negative with a 2.3 percent decline in vehicle sales from April of last year. Volkswagen has immensely suffered from an emissions cheating scandal discovered September of last year. This month the automaker reported a net loss of $1.77 billion for 2015.
“They haven’t been really fast in throwing out any accommodations or resolutions for owners out there,” said Acevedo. “That’s really part of the problem.”
Acevedo said, like most manufacturers in the face of a crisis, it will be a long road to recovery for Volkswagen.