Prices too high, automakers too slow cutting them from the pandemic spike. Stellantis sales plunged 20%, a fiasco.

By Wolf Richter for WOLF STREET.

Total new vehicle sales in Q3 – retail and fleet deliveries by dealers and automakers to end-users – fell by 5.0% year-over-year to 3.88 million vehicles. This reduced the sales gain over the first nine months to just 0.7%, according to the data from the Bureau of Economic Analysis today.

Sky-high prices, a result of massive price increases during the shortages, are preventing sales from happening. In the used vehicle market, dealers have responded by cutting prices to boost sales. Since mid-2022, used vehicle prices have dropped sharply, working off over half of the pandemic price spike.

But new vehicle prices inched lower too slowly as automakers tried to protect their record profit margins they extracted from car buyers during the era of the shortages, particularly Stellantis, where sales plunged 20% in Q3, and it now has a dealer revolt on its hands due to its pricing policies as inventory piled up. What buyers need in order to crank up volume are big price cuts, and automakers will have to give up some of their big-fat profit margins to get there.

New vehicles in the US, in terms of the number of vehicles sold, have been a no-growth business for over two decades, and only price increases and going upscale have kept revenues growing for automakers.

Too-high prices, with everyone going upscale, has had the effect of stifling sales during the good times and killing sales during bad times.

With Q3 delivery data now in the box, we estimate that sales for the whole year will be up slightly from a year ago, in line with the sales increase over the first nine months of the year.

But it’s not equally spread: The US legacy automakers along with Toyota and Nissan have lost lots of sales since 2015, while Hyundai-Kia and Tesla have eaten their lunch (charts with annual sales for each of the big automakers from 2013 through 2023).

Average incentives per vehicle sold rose 63% year-over-year in September to $3,047, or 6.2% of MSRP, according to J.D. Power estimates. Leasing, about 22% of retail sales, drove some of the incentive spending to get to discounted lease payments.

But automakers are still clinging to their hopes for big-fat profit margins. During periods in 2019, as inventories were also piling up, incentives ran over 10% of MSRP. To really get sales going, automakers should roll back some of their pandemic-era price increases. Tesla and other EV makers have already cut prices on EVs.

The average transaction price – including all incentives, discounts, and addendum stickers – fell about 3% year-over-year to $44,467 in September. J.D. Power cited rising incentives by manufacturers, rising discounts by dealers, and increased sales (due to increased availability) of lower-priced vehicles that automakers had deprioritized during the era of shortages, in favor of high-dollar vehicles.

The ATP had spiked by 36% during the pandemic, from $34,900 in December 2019 to $47,300 in December 2022. Since that peak, the ATP has dropped by 6.0%.

Sales at the biggest automakers in Q3.

#1 General Motors, Sales: -2.2% year-over-year, all brands combined, to 696,086 vehicles in Q3.

ICE vehicle sales, including hybrids, fell 4.1% year-over-year; EV sales jumped 60% year-over-year. Demand growth was in EVs, while demand for ICE vehicles sagged.

GM	Q3 2024	Q3 2023
Total	659,601	674,336	-2.2%
EVs	32,095	20,060	+60%
ICE vehicles, incl. hybrids	627,506	654,276	-4.1%

GM killed the Bolt EV and Bolt EUV at the end of 2023. But it has a slew of new EV models now on the market, including a full-size truck. Like all automakers, it is having trouble ramping up production of EVs, which require new supply chains with lots of kinks to be worked out, and GM’s EV sales are still small, but are growing rapidly, now that it has a range of models.

#2 Toyota, Sales: -8.0% year-over-year, Toyota and Lexus brands combined, to 542,872 vehicles in Q3.

Toyota has spent years pooh-poohing EVs, but last year, it got religion, and started producing its first battery-electric vehicle, the bZ4X (the rest of its “electrified” vehicles are ICE vehicles with hybrid powertrains). It sold only 4,109 bZ4Xs in Q3, but that was up 45% year-over-year.

Last year, Toyota announced big production plans of 1.5 million EVs by 2026, trying to gin up hype. But no one can ramp up production of EVs from zero to 1.5 million units in three years, not even Toyota, because the supply chains simply aren’t there. So in September, it scaled back those lofty production plans for 2026 to 1.0 million EVs, and even that will be a challenge. That’s what you get for pooh-poohing EVs for a decade.

#3 Ford, Sales: +0.7% year-over-year, Ford and Lincoln brands combined, to 504,039 vehicles in Q3.

EV sales rose by 12.2%; ICE vehicle sales, which include hybrids, inched up 0.2%. Ford has faced enormous challenges producing EVs. It figured that EVs would be a high-dollar premium product, but Tesla has been cutting prices and cranking out the numbers profitably, thereby trashing Ford’s EV strategy. So Ford has now begun to rejigger its EV strategy, focusing on lower price points and lower costs, and less reliance on China for its batteries.

Ford	Q3 2024	Q3 2023
Total	504,039	500,504	+0.7%
EVs	23,509	20,962	+12.2%
ICE vehicles incl. hybrids	480,530	479,542	+0.2%

#4 Hyundai-Kia, Sales: +5.5% year-over-year, to 426,051 vehicles.

Hyundai is the parent company of Kia, with Hyundai holding a 33.9% stake in Kia, and Kia holding stakes in Hyundai subsidiaries. They share vehicle platforms, and for our purposes, we look at them as one automaker with two brands.

It’s hard to sort out total EV sales because Hyundai’s Kona is available as an ICE vehicle and as a pure EV, but Hyundai doesn’t split out the Kona EV sales, so we’ll have to ignore them here.

EV sales without Kona EV rose by 8.2% year-over-year to 25,118 vehicles.

Their EVs currently don’t qualify for the federal tax rebates, except when leased. Other automakers have had similar issues with some of their models, such as Tesla with certain versions of its Model 3. That missing $7,500 tax rebate is a tough issue to jump over, and it seriously hurt Model 3 sales for Tesla. Kia and Hyundai are now planning to shift production of their EVs to the US to get them to qualify for the rebates. US production is supposed to start in 2025.

# 5 Honda, Sales: +8.0% year-over-year, Honda and Accura brands combined, to 366,214 vehicles in Q3.

Honda just got started with EVs. The Prologue, its first and only pure EV is new this year. It sold 3,785 in September, up from zero last year.

# 6 Stellantis, sales: -20% year-over-year, all brands combined, to 305,294.

• Ram pickup truck sales: -19%;
• Chrysler sales: -47%;
• Jeep sales: -6%;
• Dodge sales: -43%.

This company has a fiasco on its hands, and a dealer revolt, as dealers are drowning in inventory amid plunging sales. It will need huge discounts and incentives to move the iron, and it will need to sacrifice its rapacious pandemic-era profit margins, and while at it, it might just fire its European CEO and replace him with someone who knows how to price and sell trucks in the USA. Its stock has already crashed by 53% since March, long way to go.

#7 Nissan, Sales: -2.2% year-over-year, Nissan and Infiniti combined, to 212,068 vehicles.

• EV sales (Leaf and Ariya): +65.7% yoy to 10,066 vehicles.
• ICE-vehicle sales: -4.4% yoy to 202,002 vehicles

Tesla doesn’t disclose US sales. It only discloses global sales. For Q3, global sales rose by 4.3% year-over-year, to 462,890 EVs, its best Q3 ever, but still behind Q1 and Q4 2023. For now, the high-growth story has shattered (our discussion, including on the Cybertruck).

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