By KALEA HALL | email@example.com
The Lordstown-built Chevrolet Cruze sales were down in July as the market leaned toward the purchase of larger vehicles, auto analysts say.
Glenn Johnson, head of United Auto Workers Local 1714, said, however, he believes the downturn is not a sign for concern because automobile sales “ebb and flow.”
Johnson said he felt comfortable with the number because it was still in the 20,000 range.
The Cruze still holds its own with 20,926 sold in July. The car is up 4.5 percent overall for the year, but down 17.8 for July compared with last year at this time.
“We are real excited about the launch of the 2015 Cruze. It’s a nice little face-lift,” Johnson said. “It is definitely due for a redesign, and it is coming shortly.”
Consumers are taking advantage of the confidence they feel in the economy and buying larger vehicles, analysts added.
Five years ago, the Cash for Clunkers plan was unveiled. Staying true to its name, customers with gas-guzzling vehicles received cash for their clunkers with the program.
“Cash for Clunkers was supposed to introduce an era of smaller fuel-efficient vehicles in America,” said Jessica Caldwell, senior analyst for edmunds.com. “In reality, America’s appetite for trucks and SUVs has hardly wavered. But what has changed is how automakers are building these bigger vehicles.”
Eric Lyman, vice president of industry insights for TrueCar.com, said consumer confidence and the functionality of sport utility vehicles lead customers to desire them. The larger vehicles, however, are more expensive than compact cars.
The Cruze starts at $17,520 and gets an Environmental Protection Agency-estimated 25 miles per gallon in the city and 36 on the highway compared with the GMC Yukon that starts at $46,345 with 16 mpg in the city and 23 mpg.
“As people have more confidence in the economy and things will continue to get better, people are more confident to pay for that,” Lyman said.
Overall, GM July sales were up 9 percent compared with last year. Retail sales were up 4 percent, commercial deliveries increased 69 percent and other fleet deliveries rose 21 percent.
Big sales included crossovers, which were up 26 percent; SUVs, up 32 percent; and vans, up 65 percent.
Combined sales for all three were 1,048,114, making GM the first automaker to pass the million-unit milestone this year. GM was also the first to do so last year.
In July 2013, the Cruze was at 25,447 units sold. Analysts say the Cruze is competing with top hitters such as the Honda Civic, which was down with 30,038 sold last month compared with 32,416 sold in July 2013, and the Ford Focus, which was up 5.7 percent with 17,724 sold last month compared with 16,764 last July.
Even within the Chevrolet vehicles there is some competition. The Malibu, for example, is up 8.5 percent with 13,537 sold last month compared with 12,473 in July 2013.
“It is fiercely competitive, so it will be challenging,” said Alec Gutierrez, senior analyst for Kelley Blue Book.
GM sales were a little short of expectations made by TrueCar. Last week, the automotive pricing and information website released the prediction of 14.5 percent increase from last year.
Despite the decrease in Cruze sales and the influx of people in the market for the larger vehicles, Lyman said the Cruze is still an “extremely important vehicle for GM.”
“I don’t think any maker is going to shy away from focusing on that important [compact] segment,” Lyman said.
Caldwell said GM is strong in what it has to offer.
“The marketplace has spoken, and it’s clear that GM owners still have a lot of faith in the brand,” Caldwell said. “GM owners are impressed by the content of the brand’s new cars compared to their old vehicles, and that’s gone a long way toward reinforcing loyalty.”
Consumers have made the distinction that GM is being proactive with its recalls.
“You look at the Cruze compared to the Cobalt [it was also built in Lordstown] and that is no comparison,” Gutierrez said. “That has helped GM maintain their momentum.”
Incentive spending as a percentage of average transactions prices was 11.2 percent, the lowest of all domestic automakers, according to the Power Information Network, which is what GM uses to track incentive spending.
TrueCar estimated the ratio of incentive to average transaction price for GM’s Buick, Cadillac, Chevrolet and GMC models was down 7.7 percent from last year.
Other sales highlights include: Buick had its best July since 2006, with sales up 8 percent; every GMC nameplate posted a sales increase; GMC had its best year since 2006; other Chevy models such as the Corvette, Camaro, Volt and Sonic were up in sales; total Chevrolet deliveries were up 8 percent; and July 2014 marks the best Chevrolet July sales month since 2007.