(Newswire.net — July 25, 2019) — The U.S. economy is still running strong, but one important sector is facing a slump: the auto industry. Sales of new cars and trucks rose steadily between 2009 and 2016, marking the longest growth streak since before the Great Depression.
But sales to individual buyers is starting to fall. Retail sales fell 3.5% in the first half of the year to hit the lowest six-month total since 2013, according to J.D. Power and Associates. Retail sales refers to consumer purchases and provides a more accurate picture of demand compared to total sales, which includes purchased from car rental companies and fleet operators.
Low demand is driving down sales. After many years of strong sales, consumers are driving vehicles that do not need to be replaced. Newer vehicles are more durable and last longer. Prices have also increased to around $35,000 for a new vehicle, and auto loan interest rates have creeped higher.
The compact crossovers segment, which has been the hottest segment in the industry for many years, is shrinking in 2019. Sales are down 4% through June. Although still the largest segment, automakers are facing increased competition and growth in the customer base has stalled.
Sales of pickups are still gaining momentum. Purchases of full-size pickups increased 1.5% in the first half of 2019, with the Dodge Ram, Ford Ranger and Jeep Gladiator leading the sales.
As far as brands go, sales from the Detroit 3’s have fallen 3% in the first half of the year. Japanese brands fell 3.5% and European carmakers dropped 1%. But sales of Korean brands Kia and Hyundai are up this year. Genesis, Hyundai’s luxury unit, has become the fastest-growing brand in the U.S. – up 38% in 2019.
June marked the 12th straight month of year-over-year declines for Chevy and Mazda. Both automakers posted their weakest sales in the first half of a year since 2011.
Jeep became the biggest decliner among the top 10 biggest brands, falling 7.8% through June. Sales dipped 12%, with a 30% decline in the Renegade, Cherokee and Compass.
Looking at U.S. auto sales data for 27 carmakers, 16 saw their overall sales decline in 2019 compared to the same period in 2018.
Tiny cars are helping offset sales declines. Sales of Kia Soul, Chevy Spark and Ford Fiesta saw significant increases this year. Comparatively, sales of midsize cars dived 7% and large cars plummeted 21%.
The sales slump in the automotive industry has impacted production, primarily in Ohio as General Motors closed down its Lordstown plant.