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New Car Sales Drop Again In September But Discounts Are On The Rise

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Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Please Buy A New Car

After months on end of record new car sales, things appear to be finally leveling off to more normal levels. But that means Ford, General Motors, Honda, Fiat Chrysler and others have to deal with the “sales down” headline, even if sales remain strong—just not as strong as they were. Here’s Automotive News:

Overall, light-vehicle deliveries fell 0.7 percent to 1.434 million last month but remain ahead 0.3 percent for the year.

The seasonally adjusted, annualized pace of sales — 17.74 million — came in stronger than the forecast for 17.5 million. The SAAR also rose sharply from 16.97 million in August but fell from Sept. 2015’s torrid 18.04 million rate.

The relative strength of September’s sales tally, amid higher incentives, did little to make it clearer if the U.S. auto industry will eke out another annual gain or fall short of 2015’s record of 17.5 million deliveries.

“The new car market is no longer growing, which means automakers now have to measure success in terms of market share, transaction prices, incentive levels and profitability,” said Karl Brauer, senior analyst for Kelley Blue Book. “In these areas most automakers are still doing quite well, as a market plateau above 17 million annual units leaves plenty of room for success. However, some manufacturers are already leaning heavily on incentives and or fleet sales, which don’t contribute to long-term corporate health.”


The big winners? Nissan and Toyota on the strength of light trucks, Subaru because Subaru, Jaguar, and even Volvo posted a bump thanks to all the cool new cars in that lineup.

2nd Gear: Let’s Talk Incentives

But now may actually be a great time to buy a new car, since discounts are on the rise as automakers and their dealers try to keep the streak going. Here’s Bloomberg on that:

September’s strength was driven in part by generous deals offered to tire kickers. Incentives reached a record of $3,923 per vehicle last month, according to an e-mailed statement from J.D. Power. The previous record of $3,753 was set in December 2008, the month that the U.S. government first issued emergency funding to GM in preparation for its eventual bankruptcy filing.

Labor Day deals drove up industrywide incentives by $430 per vehicle over last year, according to Mark LaNeve, Ford’s U.S. sales chief. The biggest deals were on passenger cars, such as family sedans, and pickups, he said.

“There was a lot of incentive activity, very aggressive sales events, for the Labor Day period,” LaNeve told analysts and reporters Monday on a conference call. “We’ve seen more aggressive pricing activity over the last several months in the market, and we saw a continuation of that in September.”


$3,923 per vehicle! Not bad at all.

3rd Gear: What *Are* People Buying?

We know people are buying the cars. But which cars, what kinds? Luxury crossovers continue to rule the day as Millennials get older and get (in some cases at least) money, and pickup truck demand remains strong. One more from Bloomberg:

Luxury buyers are being drawn to the improving fuel economy, flexible interiors and all-weather driving of SUVs just like their less-less affluent counterparts, said Michelle Krebs, a senior analyst at AutoTrader. Mercedes’s September results included a more than doubling of sales of its GLC sport utility vehicles.

“Aging millennials are finally forming households and having kids,” Krebs said. “They’ve been fueling the market for compact and now mid-size SUVs, and we know they aspire to luxury.”

Through three quarters of this year, Mercedes deliveries totaled 249,204, with Lexus at 236,193 and the BMW brand at 230,133. The sales figures don’t include BMW’s Mini models or Daimler’s work trucks and Smart cars, which aren’t luxury vehicles.

What’s not doing so hot are the big sedans, which makes Lincoln nervous on the heels of the debut of the new Continental. Here’s Ford’s Mark LaNeve again:

“That market is entirely gone,” he said. “And to some extent it has been replaced by luxury crossovers and SUVs. To another extent, it’s been replaced by full-size SUVs.”

As a result, Lincoln has had to adjust its hopes for the Continental. “It’s still a very important segment, albeit just at much smaller volumes than it was 10, 20 or certainly 30 years ago,” LaNeve said.


4th Gear: Real Talk, The New Prius Is Ugly

The Prius has long been an important car for Toyota, as it was a rolling showcase of its technology, progressive thinking and environmental friendliness. But besides cheap gas at the moment, the new Prius has a big problem: buyers are put off by how damn ugly it is. Via Bloomberg:

“The Prius design is busy and overwrought,’’ said Eric Noble, who runs a product development consultancy called Carlab in Orange, California. “It never should have been allowed to happen.’’ In his view, the new Prius comes close to rivaling the Pontiac Aztek, a 2005-era sport utility vehicle often mentioned as one of the worst auto designs ever.

The 93,083 Priuses sold in the U.S. through August was a 26 percent drop from the year-earlier period and put the model line on pace for its worst annual deliveries in five years.

[...] “Toyota opted for an ‘entertainment’ or ‘anime’ design that appeals to the Japanese market more than the U.S.,’’ said Geoff Wardle, head of graduate studies at the Art Center College of Design in Pasadena, California. Several design elements don’t support a common theme, he said, such as the neon-red lights zigzagging through 20-inch tail lamps that protrude from the side of the car like “flying buttresses.”


That bad, huh? I mean, I’ve seen them on the road, and that new face sure is off-putting. The new plug-in Prius Prime definitely looks better. We’ll have a first drive review of that soon from our man Jason Torchinsky. Stay tunes.

5th Gear: Door Ajar

The National Highway Traffic Safety Administration just launched two big investigations into Ford for door and steering issues. Via Reuters:

U.S. auto safety regulators said Monday they are opening two new preliminary investigations into 642,000 Ford sport utility vehicles and cars over door latch warning light and steering issues.

Ford Motor Co, the second largest U.S. automaker, said last month it was reducing its adjusted full-year pre-tax profit forecast to $10.2 billion from at least $10.8 billion it predicted in July because of a $640 million charge for an expanded side-door latch recall.

The U.S. National Highway Traffic Safety Administration (NHTSA) said Monday it was opening a probe into 380,000 2011-2013 Ford Edge SUVs after receiving 1,560 reports of “door ajar” lights. Owners reported they are uncertain if vehicle doors are properly latched.

In the door-latch probe, safety issues such as doors opening while driving, doors unable to be locked while driving, and interior dome lights staying on continuously were reported. One injury has been reported, but no crashes.


Reverse: RIP Bessie Smith


Neutral: Did You Buy A New Car Last Month?

And if so, did you lock down a sweet deal?