The United States car market has proven troublesome this year for automakers as weak prices, increasing inventories, and problematic logistics has decreased earnings and lowered share prices. Automakers around the world are facing a weakening sales outlook as they are confronted with increasing competition from cheaper Chinese rivals and costs of transitioning to electric vehicles.
The current new-vehicle inventory is more than double what it was last year, which is dragging prices down according to Cox Automative. Analysts at Cox expect inventories to return to normal in a couple of months though are still weary of the future due to strong manufacturing motor vehicle output in the United States. Part of reason for high inventories is the CDK June software outage that halted dealership operations. In response to the software outage Thomas King, president of data and analytics at J.D. Power said “Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles, however it will not affect overall demand in the long term. Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are being made despite system outages.”
Ford’s stock decreased by 16% after second-quarter profit missed expectations, mostly due to Ford being weighed down by high warranty costs and its electric vehicle business. Stellantis, who owns automakers such as Alfa Romeo, Chrysler, Dodge, Jeep, and Fiat to name a few and who is the world’s number 4 producer of cars by sales saw its stock drop by 9%. Currently Stellantis is taking steps to increase margins and decrease inventory in the U.S. after missing second quarter estimates. Along with that the CEO of Stellantis, Carlos Tavares, said that he would not hesitate to cut underperforming automakers from its portfolio. Nissan’s stock has dropped 7% but hopes to boost sales by introducing new models into the market in the 2nd half of 2024. Seiji Sugiura, an analyst at Tokai Tokyo Intelligence Laboratory said, “It’s totally unclear what vehicles that Nissan is selling in the United States are popular, as the competitiveness of the models in their lineup is falling, they have no other choice but to make new vehicles, sell those, and hope that they will be popular.”
Comments