November sales hit the pause button as the industry saw year-over-year volume dip by just 0.5 percent. However, a strong showing by trucks and SUVs, particularly at Fiat Chrysler Automobiles, is keeping sales on track to exceed 17 million units for the fourth year in a row, a new record.
The slight dip in sales was the fourth month where sales did not match last year’s levels, but it portends a soft landing rather than the bottom falling out of the market. Industry analysts are predicting that next year sales may be in the mid-16 million range as makers adjust production schedules and scale back plant operations to match the market.
By manufacturer, FCA posted a 17-percent boost in in sales over last November, largely on the strength of 2019 Ram production hitting its stride and the continued success of the Jeep Wrangler. It also boosted fleet deliveries in the month, which contributed to the impressive performance. The only other brands to post gains were primarily in the luxury segment, with Land Rover posting a 26 percent jump, Jaguar and Volvo both saw 4 percent increases, Porsche up 2 percent and BMW up 1 percent.
Nissan saw the biggest decline at 19 percent, Honda followed at 9 percent, Ford saw a 7 percent drop and VW Group an 8 percent decrease. Cars continued to slide as their share continues to be less than 30 percent of overall sales, while trucks, crossovers and SUVs continue to dominate. J.D. Power said the truck share exceeded 71 percent for the month, a new record.
"The market continues to abandon cars, with no end in sight. Automakers have slowed or stopped production, so inventory is down, and buyers are mostly looking at trucks and SUVs," Karl Brauer, executive publisher of Autotrader and Kelley Blue Book, told Automotive News. "Every time we think we’ve hit the bottom in car market share another month passes with trucks and SUVs gaining while cars lose. This is the reality that recently drove Ford and GM to announce plans to further reduce car production. Who can blame them?"
Along with slowing car sales, incentives continue to drop with inventory now more closely aligned to demand. The average new vehicle incentive, according to J.D. Power, is $3,783, down from $4,068 in November 2017.
Transaction prices hold
Vehicle transaction prices continue to post gains over last year but remain fairly steady month-to-month. Kelley Blue Book data shows that the average transaction price (ATP) was $36,978 last month, a $769 or 2.1 percent increase over a year earlier. However, the ATP dropped below $37,000 month-over-month, dropping 0.1 percent from October.
“There were mixed average transaction prices among automakers in November 2018, even though the industry average did rise 2 percent,” said Tim Fleming, analyst for Kelley Blue Book. “Much of the growth took place in the pickup truck and mid- to full-size SUV segments, highlighting affordability concerns in more mainstream small SUV and car categories. However, incentives are making up the difference. Incentives on car segments are falling as production declines and rising in the SUV segment where competition is growing. But the incentives-to-transaction price ratio is healthy at around 10 percent.”
Just as its sales are climbing, FCA is also posting higher transaction prices, going up by as much as 5 percent. Ram contributed with its new Ram 1500 pickup seeing an 8 percent jump in ATP, while Jeep saw its average prices increase by 2 percent on the strength of a 10 percent increase in Wrangler.
Subaru’s overall 4 percent increase in ATP is due to the new Ascent SUV, which is transacting around $40,000, while the small Crosstrek saw its average price climb by 7 percent. Forester, which was also redesigned this year, is up 2 percent in ATP.
Midsize pickups and full-size SUVs and crossovers continue to lead segment gains, with respective increases of 3.3 and 4.7 percent in average prices. Luxury cars took a hit during the month, with prices dropping 4.6 percent on high end cars and 2.8 percent on standard luxury models.
California dealers challenge subscriptions
In a letter to the CEO of Volvo Cars North America, the California New Car Dealers Association has asked the Swedish car company to discontinue its Care by Volvo subscription service in the state. The association maintains that the factory is competing directly with its dealers by offering the program online, which allows consumers to secure two-year deals on Volvo XC40 models for either $650 or $750 per month including insurance and maintenance. The vehicles are delivered through and serviced by local Volvo dealers.
In the letter to Volvo’s Anders Gustafsson, the association’s president Brian Maas accused Volvo of packing prices by offering the same fee to subscribers including insurance regardless of their driving records. “For such a customer, Volvo manipulates the cost of the vehicle to ensure that the customer’s monthly payment equals the amount promised by the CbV (Care by Volvo) program. California law expressly prohibits dealers from ‘packing’ the cost of insurance into the monthly lease payment. As such, CbV exposes Volvo dealers to liability under this (and other) consumer protection statutes,” Maas wrote in the letter.
While the missive was sent asking for a response by Dec. 21, no legal action has been taken so far by the association against Volvo. The car company said it was addressing dealer concerns over the program and felt that it is a successful way to reach new customers for the brand.
Volvo prices 2019 V60
Speaking of Volvo, the automaker has released pricing for its all-new 2019 Volvo V60 wagon. The two models, a T5 front-drive and T6 all-wheel drive will be offered in both Momentum and R-Design, while the T6 will offer a top-end Inscription trim. The one caveat is that customers must order the vehicles from dealers, there won’t be any of the V60 wagons in stock.
The 250-horsepower 2019 Volvo T5 Momentum will start at $38,900, while the R-Design model will come in at $43,900. The 316-horsepower T6 models start with the Momentum at $43,400 and moves up to the R-Design at $48,400. The T6 Inscription is priced from $49,400. All prices exclude $995 delivery.
The rundown
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