January car sales weaken following record year

Michael Wayland
The Detroit News

Auto sales slid slightly to begin 2017, as automakers on Wednesday reported a 1.8 percent decline in new cars and trucks sold in January compared to a year ago.

Demand for utility vehicles such as crossovers, SUVs and pickups continued to help many automakers offset heavy losses in passenger cars, which experienced a 12.2 percent decline to roughly 427,600, or 37.4 percent, of the more than 1.14 million vehicles sold last month.

“January may be suffering a bit of a hangover from those rocking deals we saw in December,” said Autotrader senior analyst Michelle Krebs, referring to year-end and holiday deals that drove strong sales of 1.69 million vehicles to end last year. “It appears new-car shoppers are taking a bit of a breather.”

The slight decline last month was in line with analyst expectations and sets the year up to be on par with record-setting sales of 17.55 million in 2016. Most analysts expect sales to plateau this year for the first time in the last decade or so. However, they differ on if the industry has enough gas in the tank to reach a third consecutive year of record sales.

Autotrader and Kelley Blue Book forecast sales in the range of 16.8 to 17.3 million vehicles in 2017, which would represent a 1 percent to 4 percent decrease from 2016. is within those expectations with a forecast of 17.2 million.

“Even though it’s down, it’s sort of to be expected at this point,” said senior analyst Jessica Caldwell. “It’s not necessarily bad news, we’re simply running out of people to buy cars.”

LMC Automotive is among the more optimistic with a forecast of 17.6 million for the year, which would mark a 0.1 percent increase over last year and the third consecutive year of record sales.

“After an overheated close to 2016 and the increased likelihood of deregulation and fiscal stimulus from the Trump administration driving the economy higher, we now expect 2017 to be another record year in U.S. auto sales, though there is a lot of runway before the year is complete,” said LMC Automotive Jeff Schuster, senior vice president of forecasting.

How automakers react to the expected plateau in sales, whether it be an increase of decrease, is what many in the industry are watching, as incentive spending by automakers continues to edge higher to help control inventory levels and move vehicles out of showrooms.

Detroit Three

Ford Motor Co. and General Motors Co. on Wednesday reported slight declines in January U.S. sales of 0.7 percent and 3.9 percent, respectively, while Fiat Chrysler Automobiles NV experienced an 11.2 percent decline.

All of Fiat Chrysler’s mainstream brands aside from Ram Truck (up 5.5 percent) declined in January compared to the same month a year ago: Chrysler down 38.6 percent; Dodge down 17 percent; and Fiat and Jeep both dropping less than 10 percent. Its luxury Alfa Romeo brand was up 58.8 percent to 108 cars sold, including 70 of the all-new Giulia midsize sedans.

The Italian-American automaker sold 152,218 cars and trucks last month compared to 171,352 a year ago. The sales beat analyst expectations of the company being down as much as 15.3 percent.

All of GM’s brands aside from GMC declined, as the automaker sold 195,817 cars and trucks last month. GMC was up 1.1 percent, while Chevrolet and Cadillac declined in the low single digits and Buick was down 28.2 percent.

Buick’s large decline was due to low sales of all the brand’s passenger sedans, including the LaCrosse, Regal and discontinued Verano.

GM spokesman Jim Cain said Buick’s sales in January 2016 were exceptionally strong, so the year-over-year comparison is difficult. Part of the decline can be attributed to ending production of the Verano small car and the overall decline in car sales, particularly with large cars.

Ford’s car sales followed suit with GM and others in the industry, as it posted its less than 1 percent decline.

The Dearborn-based automaker recorded a 7 percent increase in SUV sales and 5.5 percent increase in trucks, while car sales declined 17.5 percent compared to January 2016.

Lincoln sales were up 22.4 percent to more than 8,750 vehicles sold, while Ford brand sales declined 1.6 percent.

“Lincoln had a really strong month and continues to gain market share and momentum,” said Mark LaNeve, Ford vice president, U.S. Marketing, Sales and Service.

Foreign automakers

Toyota Motor Corp. arguably reported the biggest surprise for the month, as sales dropped 11.3 percent last month compared to January 2016 — well below expectations.

The Japanese automaker’s loss somewhat can be attributed to a 25.6 percent decrease in its luxury Lexus brand as well as the automaker’s heavy car lineup and relatively stable incentive spending.

“The big surprise today was Toyota,” Caldwell said. “They came in pretty low … everyone else kind of came in as thought.”

Nissan Motor Co. and Honda Motor Co. on Wednesday both reported healthy sales increases of roughly 6 percent — driven by sales of small utility vehicles such as the Nissan Rogue and Honda CR-V.

Volkswagen AG, as expected, reported a strong increase of 15.1 percent last month compared to a year ago. The German automaker, including its luxury Audi brand, was forecast to lead January sales increases with a double-digit gain as high as 23.5 percent.

“With multiple new products on the market and looking to put the diesel scandal in the past, Volkswagen Group should report large year-over-year increases, and start to gain back market share,” said Kelley Blue Book’s Gutierrez.

Other results included: Hyundai Motor Corp up 3.3 percent; Mazda Motor Corp. up 10.1 percent; Subaru up 6.8 percent and Kia Motors Corp. down 7 percent.

Detroit News staff writer Melissa Burden contributed