Yahoo Finance Carmakers stall out
The boom in the U.S. car industry hit the brakes in February.
Sales growth at Fiat Chrysler (FCAU) and General Motors (GM) came in short of analysts’ expectations. And in a big surprise, Ford (F) sales actually fell, hurt by a slowdown in gains for its popular F-150 pickup, which is in the process of being redesigned.
The weaker-than-expected February numbers come after the industry saw a robust January, when all the Big Three automakers reported increases of 14% or more.
But Yahoo Finance Senior Columnist Michael Santoli says the car companies probably don’t need to get too worked up over last month’s dip.
“In general, people don’t need to buy a new car two months in a row,” he jokes. “We had several years of excellent growth throughout the industry, so I don’t think February is something to panic about.”
However, Santoli does see February’s reports as a sign of a cooling off of demand.
“I do think there is some fatigue in the car boom,” he says. “I don’t think it means the cycle is over.”
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Santoli points out investors haven’t really benefited from the earlier sales gains.
“The stocks have not been behaving that well with the exception of Fiat Chrysler, which is really a market share story,” he notes. “Ford and GM have been kind of struggling.”
And Yahoo Finance’s Aaron Task says that shouldn’t have happened considering the effect of plunging gas prices last year.
“What it’s done-- at least what we saw in the fourth quarter-- is to drive people to buy bigger vehicles, lower fuel efficiency, which should be good for the bottom line of these corporations,” he indicates. “So why haven’t the stocks done well? Maybe the market is telling us something. Maybe it isn’t a blip. But I think it’s a blip.”
Santoli notes one positive from the demand for larger vehicles is that companies have made more money with fewer sales.
“The average selling price is up-- people are buying those bigger cars-- so dollar-wise they bought more,” he points out. “It just wasn’t in units.”
And Task feels the economic signs suggest most people have purchased their new set of wheels already.
"Both the New York Times and the Wall Street Journal have stories about how the average American is taking the savings from gas prices and putting it in the bank or paying off bills,” he says. “I think a lot of people who were able to get a new car got a new car.
