It’s a tough time to be in the car business. After the euphoria that came with two record breaking years — 2015 and 2016 — new car sales are slumping. The market was down 4.7% in April, according to Bloomberg. Automakers are looking to boost incentives in the months ahead to attract more buyers and are planning to shutter some factories for up to 13 weeks later this year to keep inventories from ballooning. While EV sales were not spectacular in April, they still managed to push higher despite the decline in the market overall. Honda and Ford led the losers. Each was down 7% in April. The news sent Ford stock tumbling to its lowest level in 4 years.
“It was a low-interest party, but lenders have pulled back,” Maryann Keller, an auto industry consultant in Stamford, Connecticut, tole Bloomberg in a telephone interview. “They have made it more expensive for the borrower to get credit. Some people can’t get financed and for others it’s too expensive.” Auto loans to sub-prime borrowers have exploded in recent years, but lenders are becoming more cautious as the rates for defaults and delinquencies have been inching up.
“This will add to investor angst and the belief that production cuts are needed,” Joe Spak, an analyst at RBC Capital Markets, said in a report Tuesday. “This adds fuel to the fire to the thesis that higher incentive spending is needed to support demand and that even that impact is waning.”
On the EV side of things, sales of the Toyota Prius Prime plug-in hybrid are leading the way forward. It finished the month just slightly ahead of the Chevy Volt in US sales — 1,819 to 1,807. Combined, the Tesla Model S and Model X combined for sales of 1,840 in the US — 1,125 for the Model S and 715 for the Model X — according to Inside EVs. Chevrolet sold 1,292 of its Chevy Bolt battery electric cars, helped by higher inventories now on dealer lots. The Bolt will not be available everywhere in the US until September.
GM senior executive Mark Reuss told the press this week that his company will be the first manufacturer to make selling electric cars profitable. “We know the customers would like to drive electric but are unwilling to pay, and that’s why we’re going to be the first company to (produce) electric vehicles that people can afford at a profit,” he said. Reuss claims the company is hard at work finding ways to lower the cost of batteries and associated systems in order to drive make its EV offerings more affordable.
Worldwide, Inside EVs thinks this could be the year EV sales pass the 1,000,000 mark. So far, they are up more than a third over last year. One million may not seem like much compared to the total global market of about 50,000,000 cars a year, but it is like watching the tide come in. The difference minute to minute is small, but soon it’s time to move your beach chair. EV sales are showing strength in a time of weakening conventional car sales. That is a very good sign.