(WWJ) It looks like car sales fell about 8% in November — pretty much what analysts were expecting.
“That, we feel, is probably driven by some price fatigue, and then also the continued dip in EVs following the expiration of the federal tax credits,” says Ford analyst Erich Merkel.
Ford beat the trend with sales down about 1%. But, Merkel says they were helped because they had very good inventories of entry level trims, and customers were looking for bargains.
“We saw customers gravitating more toward those base level trims than we have seen in the past.”
That pushed sales of models like the Maverick and Ranger up double digits, while Ford EV sales tumbled, something we saw at a most of the carmakers who still report their sales monthly
“We think EV sales will be down about 50% this month,” said Merkel. “So that does create a drag on the overall industry.”
This comes as many customers pushed purchases of electric vehicles forward into the summer, as they knew federal incentives would expire at the end of September.
“That expiration prompted many shoppers to accelerate buying decisions, resulting in a surge in EV sales that temporarily inflated the overall industry sales pace,” said Thomas King, President of OEM solutions at JD Power. “Now, two months after the credit expired, the industry continues to feel the effect of those accelerated purchases. In November, EVs are expected to account for just 6.0% of new-vehicle retail sales, consistent with October but well below the 12.9% recorded in September.”
Many carmakers, including GM and Stellantis, only report their sales quarterly. Of the carmakers that report their sales monthly, Toyota and Kia were the brands that saw their sales up, by roughly 3% at each brand. Honda sales dropped more than 15%. But they were also impacted by a shortage of computer chips.
At Hyundai, sales were down two percent. That was impacted by drops of over fifty percent 50% for the brand's electric vehicle offerings. Hyundai had its best hybrid month ever, with hybrid sales up 42%.
This now marks two months in a row of weak sales, and it doesn’t bode well for the final quarter of the year.
“The new-vehicle sales pace had been expected to slow in the fourth quarter, and that’s what we are seeing,” said Cox Automotive Senior Economist Charlie Chesbrough. “The headwinds from higher prices and fewer government subsidies for electric vehicles are finally slowing the market after a surprisingly strong previous six months.
This could lead to more discounting and more year-end and holiday sales. Those are needed, says Chessborough, because some of the pressures that have been building for the full year are now starting to play out.
“Now, with more tariffed products replacing existing non-tariffed inventory, prices are drifting higher, leading to slower sales which may last through the remainder of the year and into next year.”