Americans turn to buying cheaper cars

NEW YORK: Toyota Motor Corp and Honda Motor Co notched big US sales gains to start the year and General Motors Co grew retail deliveries as demand for lower-priced models help automakers defy expectations for a broad slowdown.

Toyota said that deliveries rose more than 20% in the first quarter, buoyed by the compact Corolla sedan and RAV4 crossover. Honda’s CR-V crossover and Civic compact drove the Japanese automaker to a 17% sales increase.

GM reported a 1.5% drop in units sold during the quarter due to lower purchases by corporate fleets, but increased sales at retail by 6% with its Chevrolet Trax compact showing the biggest gain.

The early results underscored the importance of affordability for car buyers after pandemic-driven shortages and high interest rates drove up costs in recent years.

The pricing bonanza that juiced automaker profits during the pandemic is fading as production normalises. Now that inventories are rising, car companies are doling out more incentives and prices are starting to slip.

Budget cars and compact sport-utility vehicles (SUVs) made eye-popping share gains in the first quarter, with sedan growth matching SUVs at Toyota. Large pickup trucks, one of the industry’s priciest segments, lost ground in January and February, according to researcher GlobalData.

Several brands, including Jeep, Tesla and Ford, reduced prices to win back inflation-weary consumers and spur demand in the sluggish electric vehicle (EV) market.

“I’m surprised about how resilient the market has been,” said David Oakley, an analyst with GlobalData.

“Affordability is a massive issue for the industry, and it will be going forward. But right now it seems they’re weathering the storm, and people are somehow making it work.”

GM said sales of its large and pricey SUVs, including the Chevrolet Tahoe and GMC Yukon, tumbled.

Meanwhile, purchases of its new Chevy Trax, a compact SUV with a starting selling price of just US$20,400, jumped almost sixfold as part of the company’s push into affordable vehicles.

The company is seeing slow progress on solving production problems in its EV battery operations that make the company’s new ultium battery pack.

While the volume is still relatively small, GM had its best quarter with the new-generation of EVs, selling 5,800 of the Cadillac Lyriq and 1,668 electric Hummer trucks.

Analysts expected the industry’s yearly sales pace, known as the seasonally adjusted annual rate, to reach about 15.8 million in March, up from 14.9 million a year ago, according to the average estimate of eight analysts surveyed by Bloomberg.

The actual figure was slightly lower at 15.5 million, according to analysis by Wards Automotive Group.

Many major automakers released US sales figures, while Tesla Inc reported global results.

Stellantis hadn’t yet published its results in New York.

Ford Motor Co was due to report first quarter sales yesterday, but the automaker already signalled it was a down month for F-Series pickup trucks.

Chief financial officer John Lawler told analysts last week the company held about 60,000 F-150 pickups in inventory for quality checks in the first quarter as it works the bugs out of a redesign of its biggest money maker.

Since Feb 9, Ford has had a stop-ship order on the electric F-150 Lightning for an undisclosed quality issue.

Toyota reported US new vehicle sales of 565,098 in the quarter, with higher growth coming from its namesake brand compared to the luxury Lexus line.

The company was boosted by a nearly 40% gain in Corolla sales. RAV4 sales were up nearly 50%.

Nissan Motor Corp’s sales gained 7.2% in the quarter, led by the Nissan Rogue crossover and budget Sentra sedan, which posted a 78% jump in deliveries.

The company declined to break out what percentage of sales went to retail buyers or fleet, typically rental car companies.

Kia America’s sales slipped 2.5% in the three-month period despite a 10% increase in sales of its compact Forte car.

Hyundai Motor Co’s US sales were roughly flat in the quarter.

Consumers seem to be cooling to fully EVs due to a lack of charging infrastructure and high prices.

While EV sales rose from a year ago, volume in the first quarter likely declined sequentially for the first time since early in the pandemic, according to researcher Cox Automotive. — Bloomberg