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December U.S. Auto Sales Dim Despite Big Rebates, SUV Demand

December U.S. Auto Sales Dim Despite Big Rebates, SUV Demand

By Philly Murtha, December 26, 2017

Consumer demand for light trucks—especially SUVs—continued to climb in December despite sluggish new-vehicle sales, which may dip 2% from a year ago when adjusted for one less selling day. December represents the eighth of 12 months in 2017 where the sales pace has faltered vs. the year-ago monthly selling rates, according to an update from J.D. Power and auto forecasting partner LMC Automotive.

Sales data collected during the first two weeks of December reveal that total new car and light truck (retail and fleet) deliveries will drop 2%, or by about 95,200 units to 1.592 million units vs.1.687 million units in December 2016. Retail sales are estimated to dip 2.6% from last December to 1.3 million units, while fleet deliveries will rise 0.8% to 286,000 units to make up 18% of the total sales mix—flat with last year’s mix.

Auto Sales

Although the retail sales pace is softer, “the year will still rank as the eighth best retail sales year in history,” according to Thomas King, senior vice president of the Data and Analytics Division at J.D. Power. However, King said that incentive spend per vehicle is at a record $4,302 in December, accounting for 11.2% of a new-vehicle MSRP, and the average transaction price is $32,933, with trucks accounting for a record 68% of total sales.

In comments on the overall auto market in 2017, which will decline by some 300,000 units from 2016, Jeff Schuster, senior vice president of forecasting for LMC Automotive, said, “SUV demand has been robust and is expected to finish up 5% in 2017 from 2016, accounting for a 43% share of total light-vehicle sales.” He sees SUVs continuing to reign, and says they will make up 50% of new-model activity in 2018, pushing share up to 45%, even as the total market contracts further in 2018. LMC’s final forecast for total sales in 2017 remains at 17.2 million units, off 1.9% from 2016 totals. In 2018, total sales are projected to dip 1.2% to slightly under 17.0 million units.

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