Auto analysts: 2016 sales not expected to break record

December 27, 2016 at 12:05a.m.

YOUNGSTOWN

The year will end just shy of being another record-breaker for the auto industry.

Analysts expect total 2016 U.S. sales to hit 17.4 million. Last year, 17.5 million vehicles were sold, making it the best year for the industry.

“Any time you get over 17 million sales, it is a strong year,” said Eric Lyman, vice president for industry insights for TrueCar and ALG, a TrueCar company. “It’s going to come down to the wire whether we break last year’s record.”

If analysts’ forecasts are shattered, this will be the seventh- consecutive year of sales growth for the industry.

ALG analysts expect December auto sales to be down 2.6 percent year-over-year to 1.6 million sales. When adjusted for the one fewer selling day, sales could come in at 1 percent higher over last December on a daily selling rate basis.

Kelley Blue Book analysts also expect December auto sales to come in at 1.6 million.

Analysts say the weekend holidays during the month could be part of the reason for the sales setback.

“Weekends are a great car- buying time,” said Jack Nerad, executive marketing analyst for Kelley Blue Book. “They are disrupted by Christmas and New Year’s. That’s part of the issue. The other part of the issue is just a general slowing of sales.”

Analysts expect General Motors will be the automaker with the greatest sales-volume increase in December. Kelley Blue Book analysts forecast GM to see a 3.7 percent year-over-year increase, and ALG expects the automaker will see a 2.3 percent increase.

“More volume is better than less volume almost always, but some companies are being a little more disciplined with volume, like GM,” Nerad said.

GM has slowed down its fleet sales to focus on the more profitable individual retail sales.

“They are doing that while remaining pretty disciplined with incentivizing,” Nerad said.

Kelley Blue Book analysts expect the midsize utility segment to be the fastest-growing segment in December with an estimated 4.5 percent increase. The compact-car segment, which is what the Lordstown-built Chevrolet Cruze falls under, is expected to see a 3 percent decline in sales year-over-year. The midsize car segment could see the largest decrease of 8 percent.

Analysts don’t expect the trend of consumers’ choosing larger vehicles over smaller vehicles to die down anytime soon.

Sales are expected to plateau in 2017 and come in between 16.8 million and 17.3 million, according to Kelley Blue Book analysts. “2017 is going to be a fascinating year for a lot of reasons,” Nerad said.

Nerad noted interest-rate increases and the impact of having a new administration in the White House. President-elect Donald J. Trump has suggested possible tariffs on auto imports and a revamp of the North American Free Trade Agreement.

“When you change the rules for a big industry like autos ... it throws it into a tizzy,” Nerad said.

Though the volume of sales next year may decrease, it is still expected to be a strong year for the industry.

Production is one area that will take a hit, Lyman said. In January, the GM Lordstown plant will cut its third shift, affecting 1,245 jobs. The automaker cut the shift to adapt to the current market trend. GM also will cut the second shift at its Detroit Hamtramck Assembly Plant in March, eliminating 1,300 jobs.

Also in January, GM said it would temporarily shut down five factories, including GM Lordstown, to reduce its car inventory on dealer lots.

“It’s a natural thing to get that under control,” Lyman said of controlling inventory levels. “It’s unfortunate that it comes at the cost of jobs and shifts.”