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Automakers Celebrate Strong June Sales as Industry Prepares for Potential Impact of Tariffs

Automakers reported strong June sales in the United States.  Riding a wave of truck sales and new crossovers, GM posted a 4.6% increase for the second quarter and increased its market share to 16.6%.  Ford increased total sales in June by 1.2% over June 2017, and increased SUV and truck sales by 8.9% and 3.2%, respectively.  FCA reported its best June retail sales in 14 years, with Jeep increasing sales by 19% for its best June sales to date.

Other automakers also celebrated strong truck, crossover, and SUV sales, with Honda setting a new June sales record driven by strong sales of the Acura RDX, Honda Pilot, and Honda CR-V.  Toyota’s sales were up 3.6%, with record sales of the RAV-4 and Highlander.

Internationally, the markets showed mixed results.  Although auto sales in China rose 4.8% in June, this was a sharp decrease from the 9.6% growth in May and 11.5% growth in April.  German sales rose 4.2% in June, with VW brand’s sales increasing 9.6%.  New car sales in Italy declined 7.3% in June, largely due to a 17% decrease in diesel sales.

Automakers and industry analysts are keeping a close eye on the impact of tariffs on auto sales over the remainder of the year, even as a group of steel users filed a legal challenge to the U.S. steel tariffs.  In the challenge, the American Institute for International Steel seek a declaration that Section 232 of the Trade Expansion Act of 1962, upon which the tariffs are based, is unconstitutional.

Despite the pending legal challenge and changing landscape of the tariffs, automakers have already begun adjusting for the impact of tariffs.  BMW announced it is moving production of some of its SUVs to China and raising the price of SUVs imported to China to offset the tariffs.  Tesla similarly increased the prices of its cars in China by 20%.  However, Ford announced it does not currently intend to raise prices in response to the tariffs, as many of its cars are built in local factories.  Ford has faced a challenging 2018 in China, with its June auto sales in China reflecting a steep decrease of 38% from June 2017, and the first half of the year showing a 25% decrease year over year.  GM and other automakers have not yet determined whether they will revise their prices due to the tariffs.

© 2018 Foley & Lardner LLP

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About this Author

Lauren M. Loew business law attorney Foley and Larner Law Firm
Partner

Lauren M. Loew is a partner and litigation lawyer with Foley & Lardner LLP and a member of the Business Litigation & Dispute Resolution Practice and Automotive Industry Team. Ms. Loew represents clients on matters including products liability defense, commercial contract disputes, supply chain management, and post-acquisition disputes. Ms. Loew represents clients in state and federal courts and arbitrations around the country. She is co-editor of Dashboard Insights, the Automotive Industry Team blog.

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