Auto Stocks Down, Under-perform S&P 500

The Kerrigan Auto Retail Index was down -3.97% for the month of November, significantly underperforming broader equity indices.  The S&P 500 Index was up 1.79% in the same period. 

Six of the seven component stocks were down in November.  Asbury Automotive Group was the only stock to post a gain, increasing 6.18%.  Sonic Automotive posted the largest loss of 12.86%, followed by Lithia Motors (-9.51%), AutoNation (-8.21%), Group 1 Automotive (-5.79%), CarMax (-2.71%) and Penske Automotive Group (-1.76%). 

Seasonally adjusted annualized sales rate (SAAR) came in at 17.55 million, which exceeded forecasts of 17.3 million and is the second highest pace month of 2018.  Through November, US sales are up 0.4% and remain on track for a 4^th straight year above 17 million units, extending a record streak above that mark. FCA was up a notable 17% with both higher retail and fleet sales.  FCA’s volume advanced 12% at Jeep, 44% at Ram, 15% at Dodge and 36% at Alfa Romeo.

“The market continues to abandon cars, with no end in sight. Automakers have slowed or stopped production, so inventory is down, and buyers are mostly looking at trucks and SUVs,” said Karl Brauer, executive publisher of Autotrader and Kelley Blue Book. “Every time we think we’ve hit the bottom in car market share another month passes with trucks and SUVs gaining while cars lose.”

Other significant industry data include:  

• Fleet sales are expected to total 263,300 units in November, up 3.5% from November 2017. Fleet volume is expected to account for 19% of total light-vehicle sales, up from 18% last year.
• Trucks and SUVs accounted for 71.2% of new-vehicle retail sales in November, the highest level ever for the industry, marking the second consecutive month above 70%.
• The average new-vehicle retail transaction price in November is expected to reach $33,697, an all-time record. 
• Average incentive spending per unit in November was $3,783, down from $4,068 in November 2017.
• Consumers are expected to spend $36.9 billion on new vehicles in November 2018, down $220 million from last year’s level.
• Days to turn, the average number of days a new vehicle sits on a dealer lot before being sold to a retail customer, was 70 days through November 11, down 4 days from last year.

Category: General Update, News