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The next steps automakers could take after sales drop again in April

DETROIT (Reuters) - Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down. The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But two straight weak months has heightened Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since the Great Recession's end in 2010. Auto sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at an annual rate of just 0.7 percent according to an advance estimate published by the Commerce Department last Friday. Excluding the auto sector the GDP growth rate would have been 1.2 percent. Industry consultant Autodata put the industry's seasonally adjusted annualized rate of sales at 16.88 million units for April, below the average of 17.2 million units predicted by analysts polled by Reuters. General Motors Co shares fell 2.9 percent while Ford Motor Co slid 4.3 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.2 percent. The U.S. auto industry faces multiple challenges. Sales are slipping and vehicle inventory levels have risen even as carmakers have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars. The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs? To bring down stocks of unsold vehicles, the Detroit automakers need to cut production, and offer more discounts without creating "an incentives war," said Mark Wakefield, head of the North American automotive practice for AlixPartners in Southfield, Michigan. "We see multiple weeks (of production) being taken out on the car side," he said, "and some softness on the truck side." Rival automakers will be watching each other to see if one is cutting prices to gain market share from another, he said, instead of just clearing inventory. INVESTORS DIGEST BAD NEWS Just last week GM reported a record first-quarter profit, but that had almost zero impact on the automaker's stock. The iconic carmaker, whose own interest was once conflated with that of America's, has slipped behind luxury carmaker Tesla Inc in terms of valuation.

Ford made three big mistakes in calculating MPG for 2013 C-Max Hybrid

It's been a rough time for the official fuel economy figures for the Ford C-Max Hybrid. When the car was released in 2012, Ford made a huge deal about how it would beat the Toyota Prius V, which was rated at 42 combined miles per gallon, 44 city and 40 highway. The Ford? 47 mpg across the board. How did Ford come to this place, where its Prius-beater turned into an also-ran? Well, after hearing customer complaints and issuing a software update in mid-2013, then discovering a real problem with the numbers last fall and then making a big announcement last week that the fuel economy ratings of six different 2013 and 2014 model year vehicles would need to be lowered, the C-Max Hybrid has ended up at 40 combined, 42 city and 37 highway. In other words, the Prius trumps it, as daily drivers of those two vehicles have known for a long time. The changes will not only affect the window sticker, but also the effect that the C-Max Hybrid (and the five other Ford vehicles that had their fuel economy figures lowered last week) have on Ford's compliance with greenhouse gas and CAFE rules for model year 2013 and 2014. How did Ford come to this place, where its Prius-beater turned into an also-ran? There are two technical answers to that question, which we've got below, as well as some context for how Ford's mistakes will play out in the bigger world of green vehicles. Let's start with Ford's second error, which is easy to do since we documented it in detail last year (the first, needing to do a software update, was also covered). The basic gist is that Ford used the general label rule (completely legally) to test the Fusion Hybrid and use those numbers to figure out how efficient the C-Max Hybrid is. That turned out to be a mistake, since the two vehicles are different enough that their numbers were not comparable, despite having the same engine, transmission and test weight, as the rules require. You can read more details here. Ford's Said Deep admitted that the TRLHP issue is completely separate from the general label error from last year. Now let's move on to last week's announcement. What's interesting is that the new recalculation of the MPG numbers – downward, of course – was caused by a completely separate issue, something called the Total Road Load Horsepower (TRLHP). Ford's Said Deep admitted to AutoblogGreen that the TRLHP issue had nothing to do with the general label error from last year.

GM already raising prices on 2014 Silverado and Sierra pickups

General Motors must be pretty pleased with sales of its two newest pickups, the GMC Sierra and Chevrolet Silverado, as it's announced price hikes for both models, as part of a planned price tweak.
Prices will be bumped by as much as $1,500, although weirdly, they'll be offset by as much as $1,500 in cash-back offers through the end of October. Fox Business reports that GM spokesman Jim Cain said of the price hike, "With the sell down of the '13 models nearly complete, this price adjustment was planned and is a normal part of business."
The move, as Fox is quick to point out, is an interesting one, as sales of the twin pickups struggled last month relative to the Ford F-Series, while both of GM's crosstown competitors have been aggressively undercutting Silverado and Sierra prices. The F-150 starts at $24,070 and the Ram 1500 comes in at $23,600, not counting any cash on the hood. A base Silverado, meanwhile, retails at $25,575.