It seems that "Big 3" auto sales for the month of June managed to hit a sweet spot whereby they were down just enough year-over-year to spark a massive equity buying binge on a shortened holiday trading session. GM, Ford and Chrysler posted YoY sales declines of 6% on average, which was less negative than expected, so positive (negative x negative = positive...it's just math).
Meanwhile, in another positive sign for the auto industry, Ford, which previously described the current sales environment as a 'plateau', confirmed on their sales call that the "industry peaked" last year and was unlikely to top 2016 sales figures at any point in the near future.
Overall inventory days continue to come in at roughly ~15% higher YoY...which we assume the market also views as a 'positive' because it provides consumers with a better selection?
Meanwhile, GM's inventory days were up a modest 46% YoY to an all new record high of 105 days...a rather staggering negative statistic which was also promptly dismissed by the market.
???? GM's inventory has officially hit a 10-year high. 980,454 units in stock (a 105-day supply) as of June 30, the most since June 2007.
— Nick Bunkley (@nickbunkley) July 3, 2017
Finally, as Stone McCarthy Research points out, Americans, flush with their $0 down, 0% interest for 84 month auto loans, continued to shun cars for much more expensive, and profitable, trucks and SUV's.
General Motors domestic car sales came in much lower than we expected, and declined nearly 34% from June 2016. Their domestic light truck sales were much stronger than we expected, and were up over 7% from last year.
Domestic car sales were weaker than expected for Ford as well, and fell 23% from last year. Ford domestic light truck sales also came in below our expectations, though were not weak as ford domestic car sales, and were only up about 6% from June 2016.
Chrysler domestic light car sales came in right where we expected, down 19% from last year. Domestic light truck sales for Chrysler were below our expectations though, and fell around 3% from last year.
In summary, it was a good news day for auto investors.