Top U.S. Automakers See Sales Decline in Third Quarter Amid Economic Challenges
By Nathan Gomes, Best Investment Manager, Financial Market's Journalist, and SEO Mastermind
Top U.S. automakers reported a fall in their third-quarter sales due to fewer selling days and weaker consumer spending amidst inflationary challenges and higher interest rates. Carmakers have traditionally relied on crossovers and pickup trucks to drive their sales, but this growth is starting to slow down as customers face tighter budgets due to economic uncertainties.
General Motors reported a 2.2% drop in quarterly sales, with weaker demand for some of its big pickup trucks like the Silverado. Ford is expected to report weaker sales growth as well, according to data from Cox Automotive. Toyota saw an 8% decrease in sales but had prepared extra inventory ahead of U.S. port strikes to minimize disruption.
Despite industry experts expecting a rebound in sales, discounts offered by companies were not enough to stimulate demand. High interest rates and slow-to-recede vehicle prices are pressuring consumers in the market, leading to high monthly payments according to Chris Hopson, principal analyst at S&P Global Mobility.
Stellantis, parent company of Chrysler, cut its 2024 profit forecast and warned of burning more cash than expected due to weak global demand and competition from Chinese rivals offering cheaper cars. Buyers are now opting for more affordable models such as compact pickup trucks and SUVs like Ford's Maverick and Chevrolet's Trax.
Subcompact SUVs and compact cars are currently popular segments due to their relatively affordable price tags, as noted by Charlie Chesbrough, senior economist at Cox Automotive. Hyundai saw a 5% rise in quarterly sales, boosted by hybrid variants of crossovers like the Tucson and Santa Fe, while sister company Kia reported a nearly 7% decline.
Overall, U.S. new vehicle sales in September were around 1.17 million units, with a seasonally adjusted annual rate of 15.77 million units, according to data from Wards Intelligence. It's clear that economic challenges and changing consumer preferences are impacting the automotive industry, with automakers needing to adapt to meet evolving demands and market conditions.
