Despite a strong showing from four core vehicles in its Jeep stable, Fiat Chrysler Automobiles said Friday its August U.S. sales fell 11% against this time last year. The decline marked the 10th straight monthly loss for FCA.
The automaker attributed some of the drop to its ongoing effort to cut fleet sales to daily rental companies, while analysts noted hurricane Harvey had an effect as well - essentially wiping out an entire selling week from a top-10 market.
FCA’s August fleet sales fell by more than 35,654 cars and trucks, a 23% decrease that the company said it expected. However, retail sales also fell 7% as did the normally solid Ram line – likely a casualty of Harvey.
“Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact automakers,” Jessica Caldwell, an analyst at car-shopping website Edmunds, said in an email. “Texas is the second-largest auto market in the U.S. so an event of this magnitude is going to make a dent in sales.”
Indeed, this dent may linger into September for FCA, as well as all auto manufacturers.
“Harvey will depress one of the most critical selling periods of the year, spanning the August sales month close and Labor Day weekend,” Automotive industry forecaster LMC said in a report. “In 2016, these 11 days alone accounted for 4.1 percent of retail sales, or 580,000 units, nationally.”
Still, while the storm may have muted sales in August, and potentially September, car buying is expected to pick up as drivers buy replacement vehicles and reconstruction work spurs demand for full-size pickups. The Houston metro area ranks eighth nationwide in registered vehicles, with 5.6 million in operation, and accounts for about 2.3 percent of U.S. new-vehicle sales, according to Jonathan Smoke, chief economist at Kelley Blue Book’s parent company Cox Automotive.
For FCA in August, Jeep Grand Cherokee, Wrangler, Compass and Renegade all posted solid monthly numbers, with Grand Cherokee leading the way thanks to a 28 percent August sales increase. With the jump, the profitable Grand Cherokee solidified its place as the best-selling Jeep vehicle this year and is now FCA’s second largest seller behind Ram.
Wrangler impressed for the month as well, jumping 10 percent and is now up slightly overall for the year. The sales performance was also Wrangler’s best so far in 2017, which has to make FCA execs feel better as the company looks to launch its next generation Wrangler later this year, while still producing the current edition through March 2018.
Compass is also beginning to ramp up its sales performance, increasing 5 percent for the month as distribution of the revamped vehicle becomes more widespread. FCA discontinued both the original Compass and Patriot last year, before bringing back a redesigned Compass earlier this spring that impressed many in the auto world. FCA expects these gains to continue and grow as new Compass sales go against those weaker monthly numbers from last year.
Rounding out top Jeep performers was Renegade, which bumped up 10 percent in August after several months of disappointing sales. Thanks to its strong month, the vehicle moved back positive territory for the year and now stands with Grand Cherokee and Wrangler as the three Jeep models with sales increases year to date.
Despite these performances, Jeep was down 15% overall in August thanks in part to that discontinued Patriot and a continual monthly downturn of Cherokee. While that vehicle's floundering is somewhat explainable with FCA’s pivot away from fleet sales, it still continues to underperform on the retail side as well. At this point last year, Cherokee led all Jeep vehicles in sales at just over 140,000, but is now down 25% for 2017 with little signs of life. FCA is hoping a redesigned 2018 Cherokee, due early next year, will turn this trend.
Overall, analysts believed FCA August sales would be off 5.9%. The company sold 176,033 vehicles for the month and stands at 1,404,872 for the year.
