Automakers, analysts trim 2017 auto sales forecasts

Melissa Burden
The Detroit News

Automakers and analysts are trimming 2017 forecasts for sales of new vehicles because of slower-than-predicted demand, though many expect sales to pick up in the last half of the year.

Cox Automotive, which hosted a 2017 mid-year review in Detroit on Wednesday, estimates 17.1 million cars and trucks will be sold in the United States in 2017, followed by a drop to 16.7 million in 2018.

The forecast for this year is down 2.5 percent from a record 2016, when automakers sold 17.55 million new cars and trucks in the United States. Cox Automotive, which owns websites such as Kelley Blue Book and Autotrader and other companies, earlier in the year predicted sales would be 16.8 million and 17.3 million.

Analysts are predicting automakers will sell about 1.46 million to 1.48 million vehicles in June compared to 1.5 million the same month a year ago. It would mark the sixth straight month of sales declines. Automakers report June results on Monday.

Jonathan Smoke, chief economist of Cox Automotive, says 2017 sales are now in a “post-peak” period, though 2017 is expected to “end as the fifth-best year of all time.”

Affordability may be holding back some consumers from buying new cars, and instead they may be choosing to buy used, the company says. The average sales price for a new vehicle topped $34,600 through the first five months of the year.

On Monday, General Motors Co. announced in a call with analysts it was cutting its U.S. sales outlook for 2017 from the mid-17 million range to the low-17 million range based on industry sales being down 2 percent through May this year.

GM Chief Financial Officer Chuck Stevens said in the call that the sales environment is “more challenging.” He said, however, that most of the sales reduction is coming from less-profitable fleet sales and that demand from retail consumers remains strong and essentially flat from a year ago. GM’s sales are down 1 percent through May this year.

“We continue to see strength in pricing and volume in trucks and crossovers with relative weakness in passenger car volumes,” Stevens said.

Stevens said GM expects sales to be stronger in the second six months of the year than the first, which was the case last year.

Kelley Blue Book predicts June sales to total about 1.46 million, which would be down 3.6 percent from June 2016.

Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive, cautioned there is no collapse in the market. “It’s just a bit of a slowdown,” he said. “We’re down, but we’re not out.”

Edmunds, another car-shopping website, and research firms J.D. Power and LMC Automotive predict June sales will be down 2.3 percent from a year ago.

LMC Automotive expects fleet sales will be down about 8 percent in the first half of 2017. It is cutting its forecast for the year to 17.1 million vehicles, down from the 17.2 million predicted for the year just a month ago. The revision follows other downgrades in recent months by industry trackers and Wall Street analysts as demand has weakened following two straight years of industry sales records.

Edmunds this week said it is sticking to its sales forecast of 17.2 million vehicles for the year because it expects a strong economy and good deals will bolster sales in the final six months. If that rate is reached, it would mark the fourth-best auto sales year in history, Edmunds says.

Jessica Caldwell, Edmunds’ executive director of industry analysis, believes the sales pace will pick up because automakers need to move inventory that is higher than it was a year ago — and because the second half traditionally is better for sales.

June sales typically aren’t great because they fall between Memorial Day and Fourth of July deals, Caldwell said.

“People are really listening to the deal messaging,” she said.