Automakers See Sales Mirror Winter Weather: Cold, Cold and Cold

Fiat Chrysler defies trend with 8% increase.

by on Feb.03, 2014

Nissan enjoyed a sales increase in January as did it's luxury sibling, Infiniti.

High-flying luxury brands, middle-market nameplates and smaller boutique brands all suffered as new car sales slid 2% for January, failing to live up to the optimistic expectations of carmakers and analysts who are predicting total sales of 16 million units this year.

The record cold weather that has swept across much of the U.S. in recent weeks has apparently put car sales in the deep freeze – a situation analysts suggest was worsened by the slide in stock prices that has again raised concerns about the nation’s on-again/off-again economic recovery.

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While a few manufacturers were able to buck the downward trend, key makers including General Motors and Volkswagen saw sales tumble last month. And the industry saw average transaction prices – the amount consumers actually paid for a vehicle after factoring in incentives and options – slide after months of reaching new records.

Chrysler was one of the few makers to shake off the January freeze with products like this 2014 Ram 1500.

“Given the difficult weather in our largest sales regions, we are fortunate to have held in at retail as well as we did,” said John Felice, vice president of marketing, sales and service for Ford, which experienced a 7% decline in sales during January.

“In areas where the weather was good, such as in the West, sales were up,” Felice added. “The poor weather also had an impact on the timing of some of our fleet deliveries. A bright spot is Lincoln, which had its strongest sales in four years.”

Japanese giant Toyota, meanwhile, was off 7.2%.

“The weather conditions in slowed industry sales in key markets,” lamented Toyota Group Vice President Bill Fay, though a late-month decision to halt sales on a number of key products due to a safety-related issue didn’t help, either.

January’s foul weather cooled things a bit,” said John Mendel, executive vice president of automobile sales at American Honda, which saw sales drop 2.1% last month.

Even luxury makers, which have enjoyed robust sales during the past year, saw their sales stagnate. Mercedes-Benz reported its sales were up a meager 0.5%, while Tesla, Porsche, Volvo and Mini all reported sales declines. Jaguar Land Rover, Lexus and BMW, though reported sales increases in January thanks to strong sales in the Western United States.

For a gloomy, gray month that saw record cold and snowfall in much of the country – bringing even Southern cities like Atlanta to a halt at times – there were only a few bright spots. One of them was Fiat Chrysler Automobiles, which reported an 8% increase for the month, marking the group’s best January since 2008.

“The bad weather only seemed to affect our competitors’ stores as we had a great January with sales up 8% and achieved our 46th consecutive month of year-over-year sales increases,” said Reid Bigland, head of U.S. Sales, who noted Jeep was up 38%, while the Ram brand posted its best pickup truck sales in 10 years.

Also on the “up” side of the ledger was Nissan, which posted record January sales while its upscale sibling Infiniti reported a double-digit increase for the month.

Also gaining ground was Audi, which has recorded an ongoing series of sales records in recent months, but its bigger sibling Volkswagen reported yet another downturn, the 19% drop for January suggesting its months-long sales slide hasn’t ended yet.

Nonetheless, Mark Barnes, VW’s U.S. vice president of sales, said the maker is “optimistic we will see a steady pace in the months ahead,” especially as the German maker begins to roll out new models such as the next-generation Golf family,

Some industry analysts said they were upbeat that potential buyers who sat out the cold weather in January will rush to January in February and beyond – especially as the frigid weather of recent weeks may have pushed some older vehicles to the breaking point.

(January cold has put sales in deep freeze. For more, Click Here.)

While a number of key makers – including Japanese maker Honda, and Koreans Hyundai and Kia – have yet to weigh in, January’s numbers are a clear disappointment for an industry that ended 2013 far stronger than forecasters had anticipated going into the year. And last year’s 15.6 million total seemed on track to reach anywhere from 16.1 million to 16.5 million for 2014, according to various forecasts.

On the side – at least from an industry perspective, automakers continued to reduce incentives last month. estimated that the average giveback for light vehicles was $2,383 in January 2014, down 6.0% from January 2013; and down 15.1% from December 2013.

(Click Here to see how the automakers did with their Super Bowl ads.)

Even so, the tracking service also said that what the typical customer paid – the average transaction price, in industry-speak – fell 1.2% from year-earlier levels, to $29,882, and was off 3.3% from December.

“After what appeared to be an unstoppable run, transaction prices finally experienced a measurable drop in January,” said Jesse Toprak, chief analyst for .

It wasn’t just the cold that appeared to have had an impact. Toprak suggested luxury buyers may be hesitating to get into the market while the stock market is so jittery. But overall consumer confidence is also sliding, cautioned University of Michigan economist Richard Curtin, who oversees a monthly study of consumer attitudes.

(Toyota halts sales on key models due to safety-related problem. Click Hereto find out why.)

“Despite the recent economic gains, consumers’ outlook for their finances as well as for the national economy over the longer term have remained more resistant to improvement than in past recoveries,” Curtin said.

Toyota’s Fay noted not all of the economic news is bad, such as the fact that the gross domestic product continues to grow. Sales overall should increase at a modest pace in February, he said.

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