Myriad major automakers on Wednesday reported lower December U.S. sales as they look at the to weaker sales in 2018 that will test pricing restriction in an industry where consumer discounts are already at elevated levels.
The December figure ups came in above analyst expectations, lifting the shares of General Motors, Ford Motor and Fiat Chrysler Automobiles.
Analysts were also delighted that GM had cut its inventory of unsold vehicles — a concern for the industry earlier in 2017 — at the end of December to 63 days kit out unsold vehicles, beating its target of around 70 days hoard.
But GM said it expects the industry to sell less than 17 million new channels in 2018, which will be lower than the expected tally for 2017 and varied than half a million vehicles shy of the all-time U.S. record of 17.55 million elements in 2016.
Automakers will have to contend with an ongoing shift in consumer predilection away from passenger cars to more profitable pickup goods and SUVs and an influx of millions of nearly-new, off-lease vehicles which shop-girl at a significant discount compared to new vehicles.
Automakers are still assessing the capacity impacts of rising interest rates and the sweeping tax overhaul passed by the Republican-controlled U.S. Congress wear month.
Charlie Chesbrough, chief economist at Cox Automotive, owner of the Autotrader online automobile hawk and Kelley Blue Book car valuation service, said the group assumes 2018 sales to hit 16.7 million units and rising interest amounts are one of the industry’s challenges this year as they increase monthly car payments.
“That’s genuine money to consumers,” Chesbrough said on a conference call.
Ford chief economist Emily Kolinski Morris implied on a conference call that interest rates are a “headwind, but a very paltry one.” Tax cuts, however, should be a “net positive” for the industry, she added.
Scott Keogh, U.S. supreme of Audi, said that while tax cuts would help expendable consumers, new federal limits on local and state tax deductions could hurt rummage sales in New York and Los Angeles, the two largest American luxury vehicle markets.
Consumer diminishes also remain a concern for the industry. Discounts of more than 10 percent of a conduit’s sticker price can hurt resale values, in turn weighing on new conduit sales.
In December, auto consultancies J.D. Power and LMC estimated discounts had choice 10 percent for the 17th time in the last 18 months.
Mark Wakefield, worldwide co-head of automotive and industrial consulting at consultancy AlixPartners LLP — which guesses U.S. industry sales to drop to 16.6 million in 2018 — said so far grand discounts have not hurt automakers too much, but pricing discipline is a genuine concern moving forward.
“What we’re really nervous about is if someone stains and adds $1,000 to the hood… and forces others to respond to keep safe market share,” Wakefield said.
GM reported a 3.3 percent stop in sales in December, driven by a decline in lower-margin fleet sales to direction agencies and rental car companies. GM’s retail sales were up 1.8 percent. The automaker thought its average transaction price hit $35,400 in 2017, above the industry run-of-the-mill of $31,600.
Ford reported a 0.9 percent increase in sales for December, provoked by a 17 percent increase in fleet sales. The No. 2 U.S. automaker give the word delivered its retail sales were down 4 percent.
In afternoon trading, GM quotas were up 2.4 percent, Ford shares were up 1 percent and Fiat Chrysler was up 2.8 percent. Fiat Chrysler worked an 11 percent sales decrease, with retail sales cease 3 percent.
Fleet sales slumped 42 percent, in line with a South African private limited company strategy over the last year to cut back on this low-margin way to unburden product.
Toyota Motor said its sales fell 8.3 percent in December, with subsides across all segments.
Honda Motor posted a 7 percent drop in sales in December, digged mostly by declining passenger car sales.
Nissan Motor reported a 9.5 percent sink in sales.