After record years in 2015 and 2016, when over 17 million cars rolled off dealer lots each year, auto sales are flattening in the US.
In June, there were some sales surprises and several carmakers posted better-than-expected numbers, but overall, the sales pace came in at a little more than 16.5 million.
“The automotive industry continues to put up very good numbers, even in a post-peak market era, with June [sales pace] in the 16.5 million range,” said Rebecca Lindland, executive analyst for Kelley Blue Book, in an emailed statement.
Lindland also highlighted a positive for a market that’s witnesses moderating growth.
“Consumers are flocking to SUVs and foregoing cars, but manufacturers have plenty of excellent product out there to satisfy this demand. Only concern is rising inventories for cars, which could result in further production cuts later in the year.”
KBB also noted that transaction prices — what consumer pony up for new vehicles — are remaining solid. In fact, they’re running at historic highs and are providing automakers with some compensation for eroding sales volumes and offsetting any incentive spending.
“For June 2017, transaction prices are up nearly 2 per cent year-over-year, currently at $US34,442 for a light vehicle in the United States,” the organisation said.
But there’s potential rough weather ahead for this critical data point, which enables carmakers to sustain profits levels even in a flattening market.
“Transaction prices grew more slowly than normal in June. As the industry enters a ‘post-peak’ environment for new-car sales, Kelley Blue Book expects more pressure will be placed on transaction prices.”
For the most part, industry executive and market watchers expect US sales to lag 2016’s record by about 500,000 to one million vehicles.
But with the economy in good shape and gas prices low, few anticipate a sharp downturn in 2016.
Automakers are preparing to address some of the problems that slackening demand has created. Some will cut back on production lay off workers at plants producing unpopular vehicles (while running crossover and SUV assembly lines at capacity). Incentives may also pick up as car companies and dealers try to thin the numbers of unsold vehicles in their inventories.