2016: another record-breaking year for autos, Cruze falls behind

By Kalea Hall | January 5, 2017 at 12:03a.m.

LORDSTOWN

The auto industry had its seventh-straight year of sales growth in 2016.

Results on Friday showed 2016 sales coming in between 17.53 and 17.55 million sales, surpassing last year’s record of 17.48 million.

GM dealers sold 17,324 Cruzes in December 2016, a 2.8 percent increase over last December’s sales of 16,849.

Overall, sales have been neck and neck with last year, but analysts noted incentives helped lead the automakers to the end record result.

“We are seeing incentives used heavily on aging inventories,” said Michelle Krebs, analyst for Autotrader.com.

Krebs also noted heavy incentives were placed on the 2017 Chevrolet Cruze, the General Motors Lordstown Assembly Complex product.

“The Chevrolet Cruze was redesigned last year and we saw a lot of interest and then it fell off and it is simply because the category that it’s in is not real strong,” Krebs said. “They did a below-normal employee pricing. You saw lease payments pretty low. I think it was strategic.”

Of the December sales, 133 cars were the first-generation Cruze, 15,228 were the second-generation Cruze and 1,963 of the car sold were the Cruze Hatchback, which is built in Mexico. For the year, the Cruze came out with 188,876 sales compared with 226,602 made in 2015 for a 16.6 percent difference.

“We are seeing a steady increase of sales for the Cruze,” said Robert Morales, president of the United Auto Workers Local 1714, who represents 1,400 fabrication plant workers. “The hard-working efforts of our membership are paying off so the consumer is getting a quality car.”

Come Jan. 23, the Lordstown plant will lose its third shift, costing an expected 1,202 hourly jobs.

“With us going to two shifts, 17,000 is going to be sufficient for us to build,” said Glenn Johnson, president of the United Auto Workers Local 1112, who represents 3,000 assembly plant workers. “We are going to prepare ourselves for if and when the market changes or if any opportunity comes up – we will be willing to take advantage of those.”

The trend of consumers buying larger vehicles over smaller midsize and compact cars led automakers to cut back on small-vehicle production, which analysts think will happen more in 2017.

“If production from manufacturers is right sized, we will see incentives pull back a bit,” said Alec Gutierrez, Kelley Blue Book analyst.

Overall, analysts say 2016 was another strong year for the industry.

In December, GM’s total U.S. sales were 319,108, up 10 percent from last year. For all of 2016, GM sales were just slightly down year over year by 1.3 percent to 3,042,775 million.

Ford Motor Co.’s total December U.S. sales of 239,854 vehicles were up 0.3 percent. The automaker had its best year of sales in a decade with a total of 2,614,697 sales.

Fiat Chrysler Automobiles U.S. LLC reported U.S. sales of 192,519 units, a 10 percent decrease compared with sales in December 2015. Full-year sales were flat in 2016 compared with sales in 2015.

American Honda Motor Co. Inc. reported an all-time annual sales record of 1,637,942 Honda and Acura vehicles for 2016, an increase of 3.2 percent over 2015, the company’s former record year.

This year is still considered one of uncertainty for the industry.

Analysts expect sales to plateau, but what’s really unknown is how automakers will be affected by any changes President-elect Donald J. Trump makes.

Trump has proposed a possible 35-percent tariff on Mexico auto imports and a renegotiation of the North American Free Trade Agreement. On Tuesday, the president-elect took to Twitter to call out GM for bringing in Mexico-built Cruzes to the U.S. The Ramos Arizpe, Mexico, plant did supplement the Cruze sedan inventory here, but not by much. That supplement has now ended. All Cruze Hatchback models for the U.S. are built in Mexico.

“I know there’s concern among the import companies,” Krebs said.

There’s also concern about how tax changes will affect the cost of imported parts for vehicles made in the U.S.

“Affordability will be an issue,” Krebs said. “It’s not clear how all these things will play out in terms of car pricing. I just think it’s a giant mixing bowl of ‘what ifs’ and we don’t know what the entire picture looks like.”