Don't Panic About the Big July Auto Sales Declines

U.S. auto sales plunged year over year in July, and few major automakers were spared the carnage. Ford Motor (NYSE: F) reported a 7.5% decline in U.S. deliveries last month. Fiat Chrysler (NYSE: FCAU) posted an even bigger 10.5% decrease. Finally, deliveries plummeted 15.4% for market leader General Motors (NYSE: GM).

Not surprisingly, the big sales declines made many investors nervous about whether a new auto sales downturn is about to begin. It also aggravated existing worries about dealer inventories. Still, the month of July wasn't as bad for automakers as it may appear at first glance.

U.S. auto sales probably reached their cyclical peak last year. As a result, it has been fairly common during 2017 for automakers to report year-over-year sales declines. However, they have often attributed these reversals to a deliberate strategy of reducing deliveries to rental car companies. (Sales to rental car companies tend to carry very low margins.)

Source: Fool.com