Morningstar

No Surprises In March Auto Sales Numbers

Ford's sales rise mostly from fleet, while all four brands at GM notch double-digit sales increases.

Securities In This Article
Ford Motor Co
(F)
General Motors Co
(GM)

Automakers reported March U.S. light-vehicle sales on April 3 that gave us no new concerns about the health of the U.S. auto industry. The seasonally adjusted annualized selling rate was 17.49 million versus 16.82 million in March 2017. Total sales grew 6.4% year over year to 1.66 million, but we calculate a 2.6% rise adjusting for one extra selling day this March. Incentives are likely still high based on recent dealer comments, GM’s incentive spending as a percentage of average transaction prices at 14.5%, and ALG estimating industry incentives increased 8% versus March 2017 (to $3,750 per unit); however, we don't see a reason to change our 2018 sales forecast of 16.6 million to 16.8 million. We expect consumers to keep gravitating to used vehicles due to the continued surge of off-lease volume this year. Balanced against that on the new side will be consumers desire to have the latest tech and safety features as well as a preference for light-truck models. GM’s new generation of crossovers position it well to capitalize on this mix shift. GM also announced it will stop reporting monthly sales and only report quarterly. We are fine with this move as we think monthly sales receive more attention than they deserve, and we agree with GM that trends are more visible in quarterly data than in monthly.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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