After two record-setting years, new-car sales have cooled. Having sold 17,475,000 cars and pickups in 2015 — surpassing the previous high level mark of 17,420,000 set in 2000 — and 17,550,000 units in 2016, auto makers have contended this year with declining sales month after month.
This was expected. As we reported in this space in July of last year, TD Economics, an affiliate of TD Auto Finance and TD Bank, foresaw auto sales extending their winning streak in 2016, reaching another record high before moderating in 2017. TD’s projection of U.S. auto sales reaching 17.6 million units for 2016 proved to be pretty close to the mark.
For the longer view, the TD report was more restrained, not forecasting any new records, but expecting sales to remain healthy in 2017. The report expected sales to fall back some to the 17.3 level, settling at 17 million for a while before moving down to the 16-million-unit range. TD ascribed this then-anticipated drop to pent-up demand being absorbed, consumers holding on to their vehicles longer, competition from the used-car market, and the emergence of car-sharing services.
Again, the TD report’s forecast was spot-on. For example, in its latest analysis of
U.S. auto sales, JATO Dynamics Ltd., the London, UK-based provider of automotive data, finds that third quarter sales in 2017 fell 1.1 percent compared to the same period last year. Percentage wise that does not sound like much. Still, it accounts for roughly 50,000 units. However, the third quarter in 2016 recorded a 1.3 percent drop in sales, year over year — and that was a record-setting sales year. There is hope yet.
Indeed, as did JATO, the American International Automobile Dealers Association (AIADA) announced that in September, for the first time in 2017, auto sales rose month-over-month. While sales were down for the third quarter and down by 1.8 percent year-to-date, sales for the month were up 6.1 percent from September last year. Increased sales are good, but AIADA president Cody Lusk cautioned: “A combination of post-hurricane vehicle replacement and excellent incentives kept dealerships busy [in September].” So, extraordinary circumstances were, in part, responsible for the uptick in the sales figures.
According to AIADA, international brands outperformed their domestic counterparts in September with their sales edging up 7.6 percent from last year and accounting for 55.7 percent of all new vehicles sold. Asian brands held 46.5 of the September auto market; European brands took 9.2 percent.
Car washers can expect more of the bigger vehicles to show up at their facilities. JATO reports that in keeping with the trend over recent years, the market share of SUVs and pickups continues to rise, capturing fully 60 percent of total sales in the third quarter. That’s an increase of 3.3 percentage points over the figure recorded one year ago. JATO characterizes the impact on small hatchbacks and sedans as “stark” — their sales declining by 8.4 percent and ending up with only 34 percent of the market. The most dramatic declines, however, could be found in the A and B segments — i.e., mini cars (e.g., Fiat 500 and Chevy Spark) and subcompacts (e.g., Toyota Yaris and Hyundai Accent) — sales of which dropped by 43.9 percent and 28.8 percent year-over-year respectively.
Regardless of size or type, they all need to be washed. Every single vehicle rolling off the assembly line is a happy event.