January auto sales expected to be down as usual

By Kalea Hall



Analysts say it’s too early to tell how President Donald Trump will impact the auto industry.

But they do say a large tariff on vehicle imports from Mexico in the amount of 35 percent would have an impact on sales.

“It could shift around what people buy,” said Jessica Caldwell, senior analyst for Edmunds. “The idea of a 35 percent tax is pretty severe.”

Though analysts watch for what happens with the new administration, they are projecting that the auto industry’s seven years of growth will come to a halt this year.

In 2016, the industry saw sales of 17.5 million. Edmunds expects to see sales of 17.2 million this year. Kelley Blue Book analysts expect sales to drop 1 percent to 4 percent over last year.

“Incentive spending is up across the industry,” said Tim Fleming, analyst for Kelley Blue Book. “To us, that says that demand is slowing. If they keep producing, they are going to have to sell those cars, so incentives will have to rise.”

After flourishing sales in December 2016, the industry is expected to see a drop in auto sales this month when automakers report their sales Wednesday. KBB expects a 3 percent year-over-year decrease and a 33 percent decrease over December with expected total new-vehicle sales of 1.13 million. Meanwhile, analysts at Edmunds have forecasted sales of 1.15 million new cars and trucks in the U.S. in January. Edmunds’ forecast reflects a 31.5 percent decrease over December 2016 and a 0.7 percent decrease over January 2016.

“The fact that it is pretty much flat from last January is pretty impressive because of the strength of December,” Caldwell said. “Generally, it’s the worse month for automakers. March is when it picks up.”

Analysts from both Edmunds and Kelley Blue Book expect Volkwagen Group to post an increase in sales. KBB expects the German automaker to post a 17.1 percent year-over-year increase in sales, and Edmunds expects a 23.5 percent increase. Honda also is expected to post a sales increase of 6.6 percent, according to Edmunds. KBB analysts say General Motors will post a decline of 4.3 percent in sales, and Edmunds analysts expect the Detroit automaker to post a 1.2 percent year-over-year increase.

KBB analysts also look at segment sales and expect to see a 6.9 percent increase in sales of midsize crossovers, the only segment expected to see an increase. The compact-car segment, which the Lordstown-built Chevrolet Cruze is included in, is expected to decrease by 4.3 percent. The popular compact utilities are expected to see a 1.6 percent decrease.

“Compact utilities is the largest segment in the industry and has been for a couple of years now,” Fleming said. “Like everything, the growth is slowing. It kind of mirrors an overall industry trend.”

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