Dear automotive investors, would you like some positive news? If so, you might like to know that last month is expected -- as all figures haven't been tallied today -- to be the 20thstraight month in which light trucks outsell cars, according to Edmunds.com. That equates to big bucks for the auto industry, and especially Detroit automakersFord Motor Company , General Motors , and Fiat Chrysler Automobiles (if you still consider FCA a Detroit automaker at heart).
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Let's look at how these three checked in compared to expectations, and what it means for profitability as the first month of the second quarter enters the books.
America's largest automaker delivered nearly 270,000 vehicles last month, which was a 5.9% gain over last year's April and higher than Edmunds.com's 4.4% increase forecast. Furthermore, GM's retail and fleet sales increased 5% and 8%, respectively. As mentioned above, GM also saw an uptick in larger-vehicle sales.
"Consumer and commercial customer demand for pickups and utility vehicles has been building since last fall, and that's a clear sign that the slowdown in GDP growth during the winter months was caused by factors that are mostly transitory in nature," said Kurt McNeil, General Motors' U.S. vice president of sales operations, in a press release. "The auto industry continues to be on track to have its best sales year since 2006."
More specifically, GM's trucks and crossovers posted double-digit sales gains last month, up a respective 13% and 25%. April was GM's best-ever month for crossover sales, which should help the automaker on its multiyear trek toward 10% operating margins in North America by 2020, provided our nation's love affair with more fuel-efficient crossovers and large SUVs continues.
With GM continuing to roll out newer vehicles, including its best-selling Chevy Silverado, which was redesigned last year, average transaction prices increased$1,580 per model through the first four months of 2015.
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General Motors wasn't the only one noticing the surge in large-vehicle sales: Crosstown rival Ford was also a beneficiary.
Ford Motor Company
Newer products, including Ford's Mustang and Edge, helped drive a 5.4% sales increase last month over 2014's April. While that was slightly under Edmund.com's 5.8% expectation, it was a strong month that saw Ford's retail sales increase 7% while fleet sales lagged behind, checking in with a 1% gain. The root cause is that Ford's best-selling model, the F-Series truck, has yet to reach full-speed production with its 2015 F-150.
That said, the sales that have been recorded have been extremely profitable for Ford's important full-size truck. Consider that 60% of F-150 sales in April consisted of the premium Lariat, King Ranch, and Platinum trim -- which all rope in much higher transaction prices and margins than other vehicles. Furthermore, a staggering 63% of F-150 sales included the premium EcoBoost engine option. That's great news for investors hoping to see profits accelerate when sales of the F-150 reach full speed later this year.
Ford will produce a limited batch of 2015 Mustang GT350's. Image source: Ford Motor.
Looking at Ford-brand SUVs, it was a record-setting month, with sales jumping more than 12% compared to last year. Sales of Ford SUVs nearly reached 63,000, which included the Edge's 78% increase compared to last year. Not to be outdone by the SUV surge, Ford's iconic Mustang posted the latest in a string of great sales months. Sales of the 'Stang increased 81% with over 13,100 units sold last month, and remain up 60% through the first four months of 2015, to nearly 43,000 units.
Fiat Chrysler Automobiles
Lastly, Fiat Chrysler Automobiles posted its 61stconsecutive month of year-over-year sales gains.While this streak is impressive, the accelerated sales of last year are finally catching up to the automaker in the form of more difficult comparisons. FCA's sales increased 5.8% in April to 189,027 units, which was still its best April performance since 2007. FCA's gain checked in slightly under expectations from Edmunds.com, which projected a 7.5% increase in April compared to the prior year.
FCA had nine vehicles set sales records for the month of April, and the Dodge Challenger managed to record its best monthly sales total ever. Jeep also benefited from surging SUV sales, posting a 20% gain in April compared to last year. This is nothing new, however: The Jeep brand has recorded a new monthly sales record every single month dating back to November 2013.
"Our all-new Jeep Renegade small SUV is off to an exceptional start with more than 4,200 units sold in its first full month in the market helping to propel our Jeep brand to its best monthly sales ever." said Reid Bigland, head of U.S. sales, in a press release.
While two of these three automakers failed to live up to total sales forecasts, it's clear that the sales they did record were very profitable. Large SUVs, full-size trucks, and premium trims boosting average transaction prices and margins will bode well for all three automakers as they progress through the second quarter.
The article 2 Major Automakers Struggled in April, but These 3 Will Ride 1 Key Factor to Profits originally appeared on Fool.com.
Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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