April auto sales expected to drop year-over-year

May 2, 2017 at 12:00a.m.

YOUNGSTOWN

Another expected slow month for auto sales indicates this year’s sales will likely fall behind last year’s record 17.5 million.

But though the sales are down, they are still strong, analysts say.

“We see it is as a correction to be more in line with natural demand,” said Tim Fleming, analyst for Kelley Blue Book.

After seven years of year-over-year growth, analysts expect to see sales slow to between 16.8 million and 17.3 million this year.

For the month of April, Kelley Blue Book analysts expect to see sales drop 3 percent year-over-year to 1.45 million. Analysts at another company, ALG, expect to see a 3.9 percent year-over-year decline to 1.44 million sales.

Automakers will release their auto sales figures today.

Right now, analysts are seeing higher inventories and higher incentives.

“We are seeing inventory taking longer to sell,” Fleming said.

Automakers are adjusting their inventory levels, especially of cars, to fit with demand. Locally, the General Motors Lordstown Assembly Complex will have a four-week shutdown this summer. The plant will have a mandatory plant vacation shutdown for the weeks of June 19 and June 26, and there will be two additional down weeks July 3 and July 10. Production of the Chevrolet Cruze, a compact car, will resume July 17, United Auto Workers Local 1714 President Robert Morales said.

“The market does sway relatively quick and at times can be unpredictable,” Morales said. “At this time, [GM] is trying to adjust to what the outcome is going to be. They don’t want to overflood the market with the product.”

Also in July, the speed of the assembly line will be slowed so fewer Cruzes will be produced, which will lead to more layoffs at the plant. The third shift was cut at the plant in January, costing more than 800 jobs.

“Sales of cars are going down faster than anyone expected,” Fleming said.

Compact-car sales in April are expected to drop 5 percent year-over-year to 187,000 and midsize cars could see a 17.6 percent drop to 152,000, according to Kelley Blue Book analysts. Meanwhile, compact sport utility vehicles or crossovers are expected to see a 0.4 percent increase in April sales to 243,000.

“I think the trend is here to stay for quite awhile,” Fleming said. “I do think an increase in gas prices will bring people back to cars to some degree. It’s not going to reverse this trend because the shift has been going on for a decade.”

Patrick Min, senior analyst for ALG, said there are still positive signs for the industry in the favorable economic situation, including low unemployment rates and gas prices.

“Automakers are definitely seeing good consumer retail demand, some of it is coming with higher incentives, but still overall [there are] very positive signs throughout the industry,” Min said.