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The Zacks Analyst Blog General Motors, Honda, Toyota, Ford and Stellantis
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For Immediate Release
Chicago, IL – October 12, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors (GM - Free Report) , Honda (HMC - Free Report) , Toyota (TM - Free Report) , Ford (F - Free Report) and Stellantis (STLA - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Q3 U.S. Auto Sales in Focus: Will the Momentum Continue?
The U.S. auto market continued to ride the recovery wave in the third quarter of 2023 on improving retail inventories and strong fleet shipments. Many auto biggies, including General Motors, Honda, Toyota, Nissan and Volvo, among others registered double-digit percentage sales growth year over year, thanks to pent-up demand as the industry continues to rebound from the pandemic and chip crunch.
Per Automotive News, U.S. light vehicle sales in the third quarter of 2023 topped 3.8 million units, up 17% year over year. The seasonally adjusted annualized sales rate for September 2023 was 15.2-15.5 million vehicles, up from 13.7 million vehicles a year earlier, per GlobalData.
Q3 U.S. Sales Figures of Major Automakers
General Motors' third-quarter sales in the United States rose 21% year over year to 674,336 units. Volumes at key brands namely Chevrolet, Cadillac, Buick and GMC increased 21%, 6%, 54% and 19%, respectively. GM's closest peer Ford saw its sales increase 7.7% to 500,504 units. Sales of the Ford brand rose 8%, while that of Lincoln increased 1.8%. The third quarter of 2023 marked record electric vehicle sales for Ford on the soaring popularity of Mustang Mach-E and E Transit.
Stellantis, however, saw a 1% decrease in third-quarter volume with 380,563 units sold. While sales of Jeep, RAM, Dodge, Fiat and Alpha Romeo brands declined 4%, 4%, 23%, 30% and 16%, respectively, Chrysler sales rocketed 96% year over year.
Japan's auto giant Toyota experienced a 12.2% year-over-year increase in U.S. sales in the September quarter, reaching a total of 590,296 vehicles. The namesake brand witnessed a 12.4% rise, while Lexus saw 10.9% growth in sales. TM's closest peer, Honda's total sales saw a significant surge of 40.6%, with a total of 339,143 units sold. Both the Honda and Acura brands experienced impressive year-over-year growth, with sales rising 38.3% and 69.3%, respectively.
Sales of Subaru increased 18.8%, while that of Mazda and Nissan jumped around 22% and 40%, respectively. Volkswagen and BMW's sales were up 6.5% and 7.8% respectively. Sales of Hyundai and Kia increased 10.2% and 13.8%, respectively. Sales of Kia grew 23.4% year over year for the month.
Inventory Position
At the beginning of September, U.S. inventories amounted to 2.2 million vehicles, representing an increase of approximately 813,000 cars and light trucks compared to September 2022, according to Cox Automotive.
Despite a UAW strike against Detroit's three automakers (which began on Sep 15) and robust sales, the total inventory reached 2.21 million units as of Oct 2, 2023. This marks a 60% increase from the year-ago levels and the highest new-vehicle inventory since early 2021. However, it is still 35% lower than pre-pandemic levels in 2019.
Inventory remains relatively stable overall. Most Detroit automakers, except for certain GM models, have sufficient inventory to support operations for about a month. Some brands are experiencing inventory build-up, which will take time to affect the distribution network. However, prolonged strike action could have more pronounced effects in the coming weeks.
General Motors reported its highest inventory of new vehicles on dealer lots since 2020 at the end of the third quarter. However, GM's Chevrolet and Cadillac brands have the lowest inventory among the Detroit automakers, making them more vulnerable to a protracted strike, with supply levels below the industry average. Chevrolet is at 57 days' supply, and Cadillac is at 46. They were already below average before the strike. Interestingly, Chevrolet and Cadillac models, with the tightest supply, are often the most popular ones and the biggest profit generators for GM. Its other brands, such as Buick and GMC, have higher stock levels.
Stellantis is in a better position, with ample supply across its four volume brands. Dodge and Chrysler have the highest days' supply among all brands, at 142 and 127, respectively. Ram and Jeep, too, have a high supply. The strike has had a minor impact on Jeep models produced at the Toledo, OH plant, with the Jeep Wrangler and Gladiator having 77- and 116-day supply, respectively.
Ford's inventory varies among its brands and models. Lincoln has the highest days' supply among luxury brands at 124. Ford brand is at 88 days' supply, with the F-150 at 97 days' supply at the start of October. However, strikes have affected models like the Explorer, Bronco, and Ranger. Besides a few disruptions, Ford maintains ample stock for other models, including the Escape and Bronco Sport.
Incentives & Average Transaction Prices
The generous incentives offered by automakers played a crucial role in boosting retail deliveries in the third quarter of 2023, offsetting the impact of high interest rates. In September, the average new vehicle incentive was projected to rise to $1,806 from $999 in September 2022, with truck and SUV incentives at $1,921 (up $889) and car incentives at $1,340 (up $470), per J.D. Power-GlobalData.
The average cost of a new vehicle in the United States is high, around $47,000. Despite the Federal Reserve pausing its rate hikes in August and September, average interest rates for new-vehicle loans are now around 9%, marking their highest point in 23 years, according to Cox Automotive.
Moody's Analytics estimates that the average American household now needs 42 weeks of income to afford a new light vehicle, a significant increase from 33 weeks required just three years ago.
Jonathan Smoke, the chief economist at Cox Automotive, foresees demand for new vehicles to be constrained by the combination of elevated pricing and high interest rates.
Final Thoughts
The outlook for fourth-quarter U.S. auto sales is dependent on the evolving dynamics of the UAW strike against the Detroit 3 automakers — F, GM and STLA — and its duration. Thus far, the strike has had a relatively minimal impact on dealer inventory, sales, or pricing. However, the situation could change in the coming weeks and months if the strike persists. A prolonged strike would likely result in reduced new-car inventory for the affected brands and potentially higher transaction prices, particularly if demand surpasses supply.
Despite the U.S. auto industry's steady progress in boosting production and new vehicle inventory throughout the year, the strike could undo these gains. Although high interest rates are yet to deter consumer demand for vehicles, affordability concerns could eventually impede further growth. There's a palpable unease that the recovery momentum may stall once pent-up demand is adequately met.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog General Motors, Honda, Toyota, Ford and Stellantis
For Immediate Release
Chicago, IL – October 12, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors (GM - Free Report) , Honda (HMC - Free Report) , Toyota (TM - Free Report) , Ford (F - Free Report) and Stellantis (STLA - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Q3 U.S. Auto Sales in Focus: Will the Momentum Continue?
The U.S. auto market continued to ride the recovery wave in the third quarter of 2023 on improving retail inventories and strong fleet shipments. Many auto biggies, including General Motors, Honda, Toyota, Nissan and Volvo, among others registered double-digit percentage sales growth year over year, thanks to pent-up demand as the industry continues to rebound from the pandemic and chip crunch.
Per Automotive News, U.S. light vehicle sales in the third quarter of 2023 topped 3.8 million units, up 17% year over year. The seasonally adjusted annualized sales rate for September 2023 was 15.2-15.5 million vehicles, up from 13.7 million vehicles a year earlier, per GlobalData.
Q3 U.S. Sales Figures of Major Automakers
General Motors' third-quarter sales in the United States rose 21% year over year to 674,336 units. Volumes at key brands namely Chevrolet, Cadillac, Buick and GMC increased 21%, 6%, 54% and 19%, respectively. GM's closest peer Ford saw its sales increase 7.7% to 500,504 units. Sales of the Ford brand rose 8%, while that of Lincoln increased 1.8%. The third quarter of 2023 marked record electric vehicle sales for Ford on the soaring popularity of Mustang Mach-E and E Transit.
Ford currently has a Zacks Rank #3 (Hold) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Stellantis, however, saw a 1% decrease in third-quarter volume with 380,563 units sold. While sales of Jeep, RAM, Dodge, Fiat and Alpha Romeo brands declined 4%, 4%, 23%, 30% and 16%, respectively, Chrysler sales rocketed 96% year over year.
Japan's auto giant Toyota experienced a 12.2% year-over-year increase in U.S. sales in the September quarter, reaching a total of 590,296 vehicles. The namesake brand witnessed a 12.4% rise, while Lexus saw 10.9% growth in sales. TM's closest peer, Honda's total sales saw a significant surge of 40.6%, with a total of 339,143 units sold. Both the Honda and Acura brands experienced impressive year-over-year growth, with sales rising 38.3% and 69.3%, respectively.
Sales of Subaru increased 18.8%, while that of Mazda and Nissan jumped around 22% and 40%, respectively. Volkswagen and BMW's sales were up 6.5% and 7.8% respectively. Sales of Hyundai and Kia increased 10.2% and 13.8%, respectively. Sales of Kia grew 23.4% year over year for the month.
Inventory Position
At the beginning of September, U.S. inventories amounted to 2.2 million vehicles, representing an increase of approximately 813,000 cars and light trucks compared to September 2022, according to Cox Automotive.
Despite a UAW strike against Detroit's three automakers (which began on Sep 15) and robust sales, the total inventory reached 2.21 million units as of Oct 2, 2023. This marks a 60% increase from the year-ago levels and the highest new-vehicle inventory since early 2021. However, it is still 35% lower than pre-pandemic levels in 2019.
Inventory remains relatively stable overall. Most Detroit automakers, except for certain GM models, have sufficient inventory to support operations for about a month. Some brands are experiencing inventory build-up, which will take time to affect the distribution network. However, prolonged strike action could have more pronounced effects in the coming weeks.
General Motors reported its highest inventory of new vehicles on dealer lots since 2020 at the end of the third quarter. However, GM's Chevrolet and Cadillac brands have the lowest inventory among the Detroit automakers, making them more vulnerable to a protracted strike, with supply levels below the industry average. Chevrolet is at 57 days' supply, and Cadillac is at 46. They were already below average before the strike. Interestingly, Chevrolet and Cadillac models, with the tightest supply, are often the most popular ones and the biggest profit generators for GM. Its other brands, such as Buick and GMC, have higher stock levels.
Stellantis is in a better position, with ample supply across its four volume brands. Dodge and Chrysler have the highest days' supply among all brands, at 142 and 127, respectively. Ram and Jeep, too, have a high supply. The strike has had a minor impact on Jeep models produced at the Toledo, OH plant, with the Jeep Wrangler and Gladiator having 77- and 116-day supply, respectively.
Ford's inventory varies among its brands and models. Lincoln has the highest days' supply among luxury brands at 124. Ford brand is at 88 days' supply, with the F-150 at 97 days' supply at the start of October. However, strikes have affected models like the Explorer, Bronco, and Ranger. Besides a few disruptions, Ford maintains ample stock for other models, including the Escape and Bronco Sport.
Incentives & Average Transaction Prices
The generous incentives offered by automakers played a crucial role in boosting retail deliveries in the third quarter of 2023, offsetting the impact of high interest rates. In September, the average new vehicle incentive was projected to rise to $1,806 from $999 in September 2022, with truck and SUV incentives at $1,921 (up $889) and car incentives at $1,340 (up $470), per J.D. Power-GlobalData.
The average cost of a new vehicle in the United States is high, around $47,000. Despite the Federal Reserve pausing its rate hikes in August and September, average interest rates for new-vehicle loans are now around 9%, marking their highest point in 23 years, according to Cox Automotive.
Moody's Analytics estimates that the average American household now needs 42 weeks of income to afford a new light vehicle, a significant increase from 33 weeks required just three years ago.
Jonathan Smoke, the chief economist at Cox Automotive, foresees demand for new vehicles to be constrained by the combination of elevated pricing and high interest rates.
Final Thoughts
The outlook for fourth-quarter U.S. auto sales is dependent on the evolving dynamics of the UAW strike against the Detroit 3 automakers — F, GM and STLA — and its duration. Thus far, the strike has had a relatively minimal impact on dealer inventory, sales, or pricing. However, the situation could change in the coming weeks and months if the strike persists. A prolonged strike would likely result in reduced new-car inventory for the affected brands and potentially higher transaction prices, particularly if demand surpasses supply.
Despite the U.S. auto industry's steady progress in boosting production and new vehicle inventory throughout the year, the strike could undo these gains. Although high interest rates are yet to deter consumer demand for vehicles, affordability concerns could eventually impede further growth. There's a palpable unease that the recovery momentum may stall once pent-up demand is adequately met.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.