Automakers set a third consecutive all-time record in 2016, hitting 17.54m sales for the year. They delivered nearly 1.69m cars and light trucks in December, up 3.0% from December 2015. This translated to a very robust seasonally adjusted annualized rate (SAAR) of 18.43m.
However, analysts believe the US light vehicle market – the world’s second largest after China – has now hit a plateau with some market cooling in prospect. The US The National Automobile Dealers Association (NADA) expects US sales to drop to 17.1m vehicles in 2017 as interest rates and vehicle prices rise.
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“We are headed toward a stable market for US auto sales, not a growing market,” Steven Szakaly, NADA chief economist Steven Szakaly told a recent briefing. “The industry has achieved record sales, and pent up demand is effectively spent.”
The vehicle segment mix will continue to favour light-truck sales, which are expected to have accounted for around 60% of the market in 2017, and continuing the upward sales trend.
“It’s important to recognise that there are some political unknowns, but the economic outlook for 2017 looks extremely positive for auto sales, particularly light trucks,” Szakaly said. “New vehicle sales will likely level off in response to the US market maturing, not as a result of the [presidential] election. If increased infrastructure spending happens and certain tax cuts materialise under the new administration, it will mean a better long-term outlook.”
Szakaly added that an additional benefit to the economy could come with the easing of regulations relating to fuel economy.
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By GlobalDataOutlining some areas of concern, he said rising interest rates, ever-increasing loan terms and higher vehicle transaction prices will likely lead to a slower but still strong sales pace in 2017.
“New-car shoppers can expect a year with slightly higher interest rates on auto loans, but those increases will likely be offset by rising automaker incentives,” Szakaly said. “Rising interest rates could also increase pressure on leasing, which for many car segments is already suffering from declining residuals and used-car values. Leasing is still expected to rise in 2017, but not at the same pace we have seen over past few years.”
Crossovers and SUVs remained the dominant segment with sales up 13.2% in December and 7.4% for the full year. Utilities grabbed 40.3% of the total market in 2016 while total light truck turnover accounted for 61.5% of total industry sales. Several carmakers set new annual records, including Audi, Honda, Hyundai, Jaguar Land Rover, Kia, Porsche and Subaru.
Two of the big domestic automakers posted strong results in the final month of 2016. Ford ended 2016 on a high note, delivering 232,048 light vehicles in December, up 4.1%, to bring its total for the year to more than 2.5m units. The Ford brand and F-150 finish the year as America’s best sellers. Ford is celebrating a major milestone as F-Series now reigns as the top-selling truck in the US for 40 consecutive years and best-selling vehicle for 35 years.
Ford car sales dropped 8.4% on a daily basis in December compared with year-ago levels while light trucks increased by a similar margin, WardsAuto data shows. For the year, Ford car volume was off 13% while light trucks grew 5.6%. Overall, the automaker recorded a 4.1% daily-sales increase in December and a slight 0.2% volume decline for the year to 2,542,319 vehicles. Ford chief economist Emily Kolinski Morris projects a flat industry for 2017. Factors pointing to a steady industry in 2017 include relatively low interest rates and fuel prices, strong consumer sentiments and the aging vehicle population, she says.
Jeep set a new worldwide sales record as it remained the most popular SUV brand in the U.S. but General Motors edged FCA out of its long-held lead in total 2016 utility deliveries by 373 units.
FCA took the biggest hit of any of the major automakers as December sales dropped 10.0%. Discontinued models hurt year-over-year comparisons and serious weakness in the Alfa and Fiat lines pulled a small annual gain for the Chrysler brands down to a 0.4% deficit. On the plus side, FCA trimmed its daily rental fleet sales by 34% in December.
General Motors was the big December winner with a 10.0% improvement as all four GM brands finished ahead of last December. It was also the big loser with full-year turnover down 1.3% as GM focuses on retail sales. GM’s daily sales last month rose 13.9% on a selling-days-adjusted scale to 318,904 cars and trucks from 290,230 in like-2015 and surpassed analysts’ expectations.
GM closes the year with 3m light-vehicle deliveries, or about 40,000 off its 2015 total.
All told, the Detroit carmakers’ share of the market fell 0.9% in December. Most of that loss was picked up by the Japanese companies which saw their combined sales rise 5.4%. Hyundai and Kia gave up 0.3% of their piece of the pie as poor results from Hyundai dragged Kia’s small gain into the red. The Koreans’ loss was Europe’s gain as total sales Great Britain, Germany, Italy and Sweden rose 6.0%.
Sales of full-size pickups were down 0.3% in December despite incentives that ran as high as 20% of the manufacturer’s suggested retail price. Since sales of commercial vans continued to grow last month, light vehicle purchases by businesses look to be in good shape but the highly profitable retail sales bear watching.
Mercedes-Benz was the top premium brand for the year as a downturn in BMW deliveries dropped it to third behind Lexus. The addition of new utilities to Jaguar and Maserati brought significant growth to those marques.
However, FCA US sales were significantly down in December and for the year and reflect the continuing impact of the company’s shift away from cars to trucks and utility vehicles. Jeep and Ram are the only brands showing annual sales growth.
Although Toyota finished the year on a high – with December US light-vehicle sales rising 5.8% on a daily-sales average basis – it still left Toyota down 2% for the year at 2.45m units compared with 2.5m in 2015.
Additional reporting and data analysis from Bill Cawthon
Members’ Report: U.S. light vehicle sales
* indicates an annual sales record.
**Volkswagen Group figures include Audi, Bentley, Porsche and Volkswagen brands
Other includes estimated sales for Aston-Martin, Ferrari, Lamborghini, Lotus, Rolls-Royce and Tesla
Source: Manufacturer’s reported sales
