Top U.S. carmakers on Tuesday reported declining first quarter vehicle sales, a sign the market is past its peak sales cycle as uncertainty over the future of tariffs and the trade deal with Canada and Mexico continue to weigh on the industry.
Sales at General Motors in the three months through March fell 7 percent year-over-year to 665,840 vehicles. The decline was partially offset by increased transaction prices, which were on average $8,040 higher in the quarter, the best ever for the Detroit-based carmaker.
Despite slower sales, the company says the “U.S. economy is in solid shape, which bodes well for the industry outlook.”
“Consumer sentiment continued to recover in March and the other key drivers of auto sales like employment, wage growth and household balance sheets are healthy. The Fed paused in raising interest rates, which eases a headwind facing auto sales,” Chief Economist Elaine Buckberg said in a statement.
Meanwhile, Fiat Chrysler reported a 3 percent year-over-year decline to 498,425 units. In March, sales dropped 7 percent to 200,307. GM does not report monthly sales data.
"The industry had a tough first quarter but with spring finally starting to show its face and continued strong economic indicators, such as a boost in housing sales, lower lending rates and a strong labor market, we are confident that new vehicle sales demand will strengthen going forward," said Reid Bigland, head of U.S. sales at the company.
Jeep sales declined 11 percent and Fiat sales fell 45 percent in the quarter, while Ram pickup sales grew 15 percent.
Ford, the other member of Detroit's so-called "Big Three" automakers, reports its quarterly sales on Thursday.
|GM||GENERAL MOTORS CO.||58.76||-1.32||-2.20%|
|FCA||FIRST TR EXCH TRADED ALPHADEX FD II CHINA ALPHADEX FD||31.04||+0.29||+0.93%|
|F||FORD MOTOR CO.||14.52||-0.25||-1.69%|
President Trump previously imposed double-digit tariffs on steel and aluminum imports, adding billions of dollars of costs across the auto industry.
The White House is also considering whether to impose double-digit duties on auto imports, a proposal the sector has warned would have widespread ramifications and lead to higher vehicle costs for consumers.
Trump has threatened to close the U.S.-Mexico border this week to stem the arrival of undocumented immigrants. Such a move could shut down the auto industry within a week, according to Kristin Dziczek, vice president at the Center for Automotive Research.
An update to the North American Free Trade Agreement is awaiting congressional review. Supporters are hoping for approval of the United States–Mexico–Canada Agreement (USMCA) by August.
The deal would, among other things, require that 40 percent of vehicles are manufactured by individuals making at least $16 per hour.
Blake Burman contributed to this report.