As car sales continue to slide, Brown proposes incentive


Analysts estimate GM sales down from Q2 2017; Sen. Sherrod Brown proposes buying incentive

By Jordyn Grzelewski

jgrzelewski@vindy.com

YOUNGSTOWN

The U.S. auto market experienced a slowdown in July, with sales coming in lower than analysts’ expectations, according to sale numbers released Wednesday.

General Motors, manufacturer of the Lordstown-built Chevrolet Cruze compact car, no longer reports monthly sales numbers, but analysts said GM was not immune to the trend.

Cox Automotive, which initially forecasted GM sales to increase over July 2017, estimated the automaker’s sales were down from year-ago levels.

Also dropping below expectations were small-vehicles sales. Analysts have long noted the trend of consumers moving away from small cars to utility vehicles, but small vehicles’ market share dropped further than expected to about 31 percent, Cox reported.

Analysts noted manufacturers that typically have stronger car sales – Honda and Toyota – saw significant decreases in that segment.

“If they can’t sell cars in bigger numbers, no one can,” said Michelle Krebs, executive analyst for Autotrader.

Also Wednesday, U.S. Sen. Sherrod Brown, D-Cleveland, announced he is introducing legislation that would incentivize purchasing American-made vehicles such as the Cruze, which has long posted weak sales.

The American Cars, American Jobs Act would give customers a $3,500 discount when they purchase American-made cars. Included in the program would be all passenger vehicles made in Ohio and about 100 other vehicles made in other parts of the country, according to a list released by Brown’s office.

The legislation also would revoke a tax cut on overseas profits for automakers that cut American jobs and move them overseas.

In announcing the legislation, Brown referred to the GM plant in Lordstown, which is now operating on one shift.

“Earlier this summer, on the same day that GM laid off workers at its historic plant in Lordstown, we got word that GM plans to build its new Chevy Blazer in Mexico,” Brown said. “The company is bypassing American workers and sending jobs to Mexico.”

He was joined in the announcement by Rich Rankin, director of United Auto Workers Region 2-B, which represents workers in Ohio and Indiana.

“We just need a level playing field to compete, and right now, in this country, I don’t believe we have that,” Rankin said. “We need support for the American worker. ... Senator Brown’s bill does just that.”

Asked about the announcement from President Donald Trump’s administration it will consider rolling-back Obama-era fuel-economy standards for vehicles, Brown and Rankin said they believe it will hurt the U.S. auto industry.

“I think it’s going to hurt, especially in Lordstown,” Rankin said. “The Chevy Cruze is a very fuel-efficient vehicle. ... That, in part, helped drive the sale of the Cruze, in my opinion.”

Fiat Chrysler Automobiles reported a 6 percent year-over-year sales increase in July. American Honda reported its July sales were down 8.2 percent over July 2017. Toyota sales were down 6 percent on volume. Ford reported a U.S. sales decline of 3.1 percent in July.

“While sales were down overall year on year, the industry continues to be at high levels, so we have to keep slightly weaker sales in perspective,” said Rebecca Lindland, executive analyst for Kelley Blue Book.

“Reported sales came in weaker than we had forecast for July. This has been a hard market to predict, as the economic indicators – consumer confidence particularly – are very good,” said Charlie Chesbrough, senior economist for Cox Automotive. “At the same time, we have always felt that sales would begin trending downward in the second half. July might indicate the market has finally taken the turn we’ve been expecting.”

Asked about the impact of the Trump administration’s steel and aluminum tariffs, analysts said it’s a bit too early to tell if there has been a direct impact on auto sales.

“But clearly all the talk is scaring investors and is concerning for folks,” Chesbrough said.

Krebs, speaking from an industry conference, said, “All the talk is about trade and tariffs. It’s going to continue to be a hot topic.”

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