US auto sales fall in July as carmakers slash rental fleet sales

DETROIT: US carmakers said on Tuesday they continued to slash low-margin sales to daily rental fleets in July as the overall pace of US car and light truck sales fell for the fifth straight month.
The annualized pace of US car and light truck sales in July fell to 16.73 million vehicles, down from 17.8 million vehicles a year earlier, according to Autodata Corp, which tracks industry sales.
Investors sold shares in the Detroit Three automakers on Tuesday. General Motors Co fell about 3.5 per cent and Ford Motor Co slid about 2.5 per cent.
Several major automakers, including GM, Ford, Fiat Chrysler Automobiles, Nissan Motor Co and Hyundai Motor Co said they sharply reduced rental car sales in July, and they portrayed the decisions as putting profit ahead of sales volume.
Automakers have used low-margin sales to rental fleets to avoid factory shutdowns. With more flexible labour agreements, the Detroit automakers have shifted course. They are quicker to idle factories to reduce supply, and they are demanding higher prices, industry officials said. Fiat Chrysler has killed several models it once sold to fleets.
Big US rental car companies such as Hertz Global Holdings Inc and Avis Budget Car Rental at the same time are restructuring their fleets as values decline for rental cars they resell, and as ride services such as Uber Technologies bite into their business.
In a more troubling sign for Detroit, combined sales of large pick-ups fell 4 per cent, and sales of large sport utility vehicles declined by 20 per cent. Only the Ford F-series, up 6 per cent, improved on year-ago results among major truck models.
Declining sales could leave the Detroit Three with too many plants in North America, Jeff Schuster, a forecaster with LMC Automotive, said on Tuesday at an industry conference in Traverse City, Mich. The decline in July’s annual sales pace from a year ago equates to the output of four assembly plants.
GM gained little ground in its effort to reduce inventories of unsold vehicles. The automaker had 104 days of supply at the end of July, down from 105 days at the end of June. GM has promised investors to reduce inventories to 70 days by year-end.
— Reuters