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Cruze sales down, but retail demand is there
By Kalea Hall
LORDSTOWN
The 35.7 percent decline in sales of the Lordstown-built Cruze wasn’t a result of low demand for the compact car.
“From talking to some of the local dealers, they are selling them as fast as they are getting them,” said Robert Morales, president of United Auto Workers Local 1714 at General Motors Lordstown.
On Tuesday, GM reported total Cruze sales were 13,723 in July compared with 21,339 sold during the same time last year, but 40 percent of last year’s sales were fleet sales, according to data from TrueCar.
So far this year, the Cruze’s fleet sales have been below 20 percent because of the automaker’s plan to pull back on fleet sales to focus on retail sales, or sales to individual customers, and improve residual values.
“It shows GM’s commitment to sale strategy and what really promotes strong profitability,” said Patrick Min, senior industry insights analyst for TrueCar.
The Cruze has had better retail performance than many other sedans, Min said. He sees GM as “aggressively” marketing and ensuring a steady launch of the next-generation Cruze, which began this year at the Lordstown plant.
“They want prolonged sales growth and not an initial spike and then fall off,” Min said.
New Cruzes started to ship to dealers March 21. The Lordstown plant, where 4,500 work, has planned some Saturday shifts this month to meet demand from dealers.
“They must be getting them off the shelves very quickly,” said Glenn Johnson, president of the UAW Local 1112. “That’s a positive sign for us.”
While production continues to ramp up at the plant, Cruzes built at the plant in Ramos Arizpe, Mexico, will be sent next month to the U.S. market to temporarily supplement the supply here.
“There is a strong retail demand for the Cruze,” Min said.
The Honda Civic, a main competitor of the Cruze, also has strong retail demand and continues to post solid sales. In July, Honda reported a 5.8 percent year-over-year increase in Civic sales to 32,952 during a time when larger vehicles have been trending.
Analysts say the Civic has a strong reputation after 10 generations on the market.
“The Civic is definitely an outlier or anomaly right now,” Min said.
GM’s total sales in July were down less than 2 percent to 267,258 vehicles because of a decline in rental sales of 42 percent.
Retail sales were up 5 percent. GM noted its four brands altogether had their best July retail sales since 2007.
American Honda Motor Co. Inc. reported July sales of 152,799 Honda and Acura vehicles, a 4.4 percent gain over last July.
Fiat Chrysler Automobiles U.S. LLC reported sales of 180,727 units, up 0.3 percent compared with sales in July 2015.
Ford Motor Company’s U.S. sales were down 3 percent, with 216,479 total vehicles sold.
Overall, analysts expect total sales for the year to remain flat or slightly below last year. The year’s sales so far are at 8.6 million, a slight increase of 1.4 percent over last year. At this point, it’s unclear if total sales for the year will surpass last year’s record of 17.4 million, come in flat or decline slightly. At the beginning of the year, analysts expected to see another record-breaking year.
“The market is nearing a plateau, which we all kind of expected,” said Mark Strand, senior manager of market intelligence for Autotrader. “We are at record volume levels, and there are a lot of factors that suggest we stay here.”