Published: Fri, January 12, 2018
Science | By Hubert Green

US Auto Sales Decline, Ending Record Streak

US Auto Sales Decline, Ending Record Streak

The results put an end to the U.S. auto industry's eight-year streak of increases, as the national total slipped 1.5% to 17.23 million, according to Autodata. It's the first time in 8 years the number has dropped.

Sales of the Ford F-Series pickups rose 2.1% year over year in December to 89,385 units, and F-Series transaction prices rose $3,400 year over year to $47,800.

The December numbers were above analyst expectations, lifting the shares of General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV.

"December capped off a record year for Ford brand SUVs, making it eight consecutive years of Ford brand sales leadership".

The migration of consumers to larger, more expensive vehicles, especially luxury pickup trucks and crossovers, has come as easier credit and longer auto loans have enabled people to buy or lease vehicles they might have once considered unaffordable.

Investors were pleased GM had cut its inventory of unsold vehicles - a concern for the industry earlier in 2017 - at the end of December to 63 days supply unsold vehicles, beating its target of about 70 days supply.

"In 2017, we had solid GDP growth and good news on employment, wages and consumer sentiment, which helped deliver very strong retail sales for the auto industry", G.M. chief economist Mustafa Mohatarem said. Sales were down overall, with only a few automakers posting gains.

Ford shares are trading in the green Wednesday, as are GM shares, as both auto makers announced upbeat sales in the final month of 2017. But most other automakers saw declines.

Ford's sales in the U.S. past year fell 1.1% to 2.6 million compared with 2016, but it reports a surprise increase last month, fuelled in part by the continued success of the F-Series pickups and other large vehicles. Chevrolet was offering $11,000 off a 2017 Silverado pickup last month.

Analysts think sales will fall a bit further this year. Low unemployment and rising consumer confidence are expected to boost demand this year. "That will keep the broad economy growing, and help keep sales at very healthy levels even as the Fed increases interest rates".

Industry sales in 2018 will probably drop again thanks in part to higher interest rates and greater availability of used sport utility vehicles.

"Average transaction prices closed the year on a strong note, rising almost 2% in December 2017 to set a record high", said Tim Fleming, analyst for Kelley Blue Book.

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