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U.S. auto sales fall in July, as Detroit dials back on inventory, rental sales

DETROIT — U.S. carmakers said on Tuesday they continued to slash low-margin sales to daily rental fleets in July as General Motors, Ford and Fiat Chrysler Automobiles struggled to curb a slide in retail sales. July is on track to be the fifth straight month in which the annual pace of car and light truck sales declined from the same month a year ago, in part because of fewer fleet sales, analysts and industry executives said. July 2016 sales hit a strong 17.9-million-vehicle pace. GM said the seasonally adjusted annual sales rate fell to an estimated 16.9 million vehicles in July. At midmorning on Tuesday, GM shares were down 3.4 percent at $34.77, Ford was down 2.8 percent at $10.91, and Fiat Chrysler shares were down 0.3 percent at $12.05 in New York. GM sales dropped 15 percent from a year ago to 226,107 vehicles, as the company cut rental fleet sales more than 80 percent. The automaker said inventories of unsold vehicles at month's end were 104 days, down from 105 days at the end of June. GM has promised investors to reduce inventories to 70 days by year-end. Ford said its July sales dipped 7.5 percent to 200,212 vehicles, as it cut fleet sales more than 26 percent. Inventories fell to 77 days from 79 the previous month. Fiat Chrysler said sales dropped 10 percent to 161,477, as it also cut back sales to daily rental fleets. Among the top Japanese companies, only Toyota reported a year-to-year gain, with sales up 4 percent to 222,057 — just 4,000 units behind GM. Honda sales were down 1 percent to 150,980 — its first-quarter sales continuing to decline in North America but seeing a big increase in China. And Nissan sales fell 3 percent to 128,295. GM, Ford and Fiat Chrysler have cautioned that second-half financial results likely will be lower than first-half results, in part reflecting production cuts in North America and pricing pressures. The automakers this year have been deliberately dialing back sales to rental-car companies, which often generate little to no profit, while struggling to keep retail sales from sagging further, according to industry analysts. Industry consultant LMC cut its full-year forecast for new vehicle sales to 17 million vehicles. Automakers sold a record 17.55 million vehicles in the United States in 2016.

Major automakers post mixed US June sales figures

General Motors, Ford and Fiat Chrysler Automobiles NV posted declines in US new vehicle sales for June on Monday, while major Japanese automakers reported stronger figures. Once again, demand for pickup trucks and crossovers offset a decline in sedan sales. Automakers' shares rose as overall industry sales still came in above Wall Street expectations. The US auto industry is bracing for a downturn after hitting a record 17.55 million new vehicles sold in 2016. Analysts had predicted that overall, US vehicle sales would fall in June for the fourth consecutive month. As the market has shown signs of cooling, automakers have hiked discounts and loosened lending terms. Car shopping website Edmunds said on Monday the average length of a car loan reached an all-time high of 69.3 months in June. "It's financially risky, leaving borrowers exposed to being upside down on their vehicles for a large chunk of their loans," said Jessica Caldwell, Edmunds' executive director of industry analysis. GM said its sales fell about 5 percent versus June 2016, but that the industry would see stronger sales in the second half of 2017 versus the first half. "Under the current economic conditions, we anticipate US retail vehicle sales will remain strong for the foreseeable future." GM shares were up 2.4 percent in morning trading, while Ford rose 3.3 percent and FCA shares jumped 6 percent. "US total sales are moderating due to an industry-wide pullback in daily rental sales, but key US economic fundamentals clearly remain positive," said GM chief economist Mustafa Mohatarem. "Under the current economic conditions, we anticipate US retail vehicle sales will remain strong for the foreseeable future." Ford said its sales for June were hit by lower fleet sales to rental agencies, businesses, and government entities, which fell 13.9 percent, while sales to consumers were flat. But it sold a record 406,464 SUVs in the first half of the year, with Explorer sales increasing 23 percent in June. And sales of the F-150 had their strongest June since 2001. On a media call, Ford executives said an initial read of automakers' sales figures indicated a seasonally adjusted annualized rate of around 17 million new vehicles for the month, which would be better than 16.6 million units analysts had predicted. FCA said June sales decreased 7 percent versus the same month a year earlier.

FCA-Renault merger talks: France wants job guarantees and Nissan on board

PARIS — France will seek protection of local jobs and other guarantees in exchange for supporting a merger between carmakers Renault and Fiat Chrysler, its finance minister said on Tuesday, underscoring the challenges facing the plan. Renault Chairman Jean-Dominique Senard arrived in Japan to discuss the proposed tie-up with the French company's existing partner Nissan — another potential obstacle to the $35 billion-plus merger of equals. Renault and Italian-American rival Fiat Chrysler Automobiles (FCA) are in talks to tackle the costs of far-reaching technological and regulatory changes by creating the world's third-biggest automaker. Nissan found out about Renault's merger talks with Fiat Chrysler only days before they became public, four sources told Reuters, stoking fears at the Japanese carmaker that a deal could further weaken its position in a 20-year alliance with Renault. A deal between Renault and FCA would create a player ranked behind only Japan's Toyota and Germany's Volkswagen and target 5 billion euros ($5.6 billion) a year in savings. Some analysts, however, say the companies face a challenge to win over powerful stakeholders ranging from the French and Italian governments to trade unions and Nissan. Patrick Pelata, a former Renault chief operating officer, also criticized the deal plan for undervaluing Renault and threatening to overstretch its engineering resources. By valuing Renault at its market price, the all-share offer attributes a negative 6 billion euro value to Renault operations after deduction of its 43.4% stake in Nissan and 3.1% Daimler holding, Pelata told BFM radio. "That's hardly reasonable," he said. "And I think that shareholders, including the French state, are bound to take issue with this sooner or later." Pelata added: "FCA has big problem because they haven't invested for the future — they have no electric vehicle platform and they've done nothing in autonomous cars." French finance minister Bruno Le Maire told RTL radio on Tuesday that the plan was a good opportunity for both Renault and the European car industry, which has been struggling for years with overcapacity and subdued demand. France sets conditions Le Maire also said the French government would seek four guarantees in exchange for backing a deal that would reduce its 15% stake in Renault to 7.5% of the combined entity. "The first: industrial jobs and industrial sites.