'Incentives war' warning for US in 2018

By Dave Leggett | 21 December 2017

Edmunds forecasts that the US light vehicle market will hit 17.2m units this year after a strong end to the year as manufacturers look to shift inventory before the year finishes.

Analysts at Edmunds also warned that the flat US market could lead to an incentives war in 2018 as automakers and dealers fight for consumers in a 'smaller and highly saturated market'.

Edmunds forecasts that some 1,587,640 new cars and trucks will be sold in the US in December, for an estimated seasonally adjusted annualised rate (SAAR) of 17.7m. This reflects a 14% increase in sales from November 2017, but a 5.8% decrease from December 2016, which was a record month for the industry.

"Auto sales got off to a sluggish start in 2017 but managed to finish in a fairly decent place," said Jessica Caldwell, Edmunds executive director of industry analysis. "Even though December sales were down year over year, we expect it to be the highest volume month of 2017. Shopper traffic to dealerships really picks up once we get on the other side of the Christmas holiday as automakers pull out all the stops to eke out every last sale before the end of the year."

Based on its forecast for December, Edmunds expects to hit its full-year sales forecast of 17.2m new vehicles in 2017.

"Sales are still strong historically, but 2017 will mark the first down year for the auto industry since 2009. With sales tapering off, we could be in for a high-stakes incentive war in 2018 as automakers and dealers fight for consumers in a smaller and highly saturated market," Caldwell said.