News

US light vehicle market edges up to new record in 2016

Issued at 2017-01-05



The US light vehicle market reached a record 17.465m units in 2016, spurred on by a strong December in which daily sales were up by 6.8% over year-ago levels. Data released by Wards puts the 2016 market a slender 0.4% ahead of 2015's total.

December auto sales rose 3% to 1.68m vehicles for a bumper seasonally adjusted annualised rate of 18.29m units in the month.

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.

"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.

Outlining 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."

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.

WardsAuto said that GM's daily sales last month rose 13.9% to 318,904 from 290,230 in like-2015 and surpassed analysts' expectations by as much as 10,000 units, according to WardsAuto data. Wards noted that GM inventories remain historically high to 'suggest the automaker may have to preserve market share in the coming months to balance supply with easing consumer demand'.

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 by as much as 10,000 units, according to WardsAuto data. There were 27 days to move the metal in December, compared with 28 in the same period a year ago.

GM closes the year with 3m light-vehicle deliveries, or about 40,000 off its 2015 total. Early indications show its overall share of the U.S. market in 2016 fell to 17.4% from 17.7%, Wards said.

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.

FCA US ended the year on a downward trend, posting a 7% decline in daily light-vehicle sales in December from like-2015, following a double-digit decline in November, WardsAuto data shows. FCA posted posted 190,437 deliveries for the month, bringing its total for the year to nearly 2.23 million, off 0.4%. Wards data shows that on a daily-sales basis, only Ram was in positive territory in December, climbing 13%, while Fiat suffered the largest drop at 52%. Chrysler (-29%), Dodge (-19%), Alfa Romeo (-4%) and Jeep (-3%) all declined during the month, which had one less sales day versus like-2015.

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.

Wards noted that some of that drop can be attributed to the phase-out of the Scion brand, but also repoted that executives suggest the overall market shift toward light trucks and away from cars caught Toyota short of capacity and with gaps in its model lineup.


Source: Just Auto



Related News